One analyst research report is still wildly bullish on Sirius XM. Merrill Lynch maintained its Buy rating on the satellite radio leader. The firm’s $5.00 price target of $5 implies upside of more than 46%. Call it 50% if you round up.
Well, it turns out that the deal hosed shareholders anyway. Sirius XM shares are now trading around $3.42. The Wall Street analysts had a consensus price target of $4.60 prior to the buyout – or up 25% higher than what the buyout was. The consensus price target is now down to $4.25.
The Merrill Lynch call is led by Jessica Reif Cohen and team. The report shows that competition continued to increase in the radio industry during the second quarter. Apple made a bid to purchase Beats, T-Mobile announced its “Un-Radio” concept, and competition remains a risk for Sirius XM. Still, the team believes that Sirius has a stable position in the U.S. audio entertainment market.
ALSO READ: 11 Analyst Stocks Under $10 With Huge Implied Upside
Cohen and her team at Merrill Lynch also see a moat with catalysts coming. Sirius XM’s focus is on exclusive talk content foremost and music second by an estimated 3:1 ratio. Sirius XM is engaged in outsized capital returns and the buybacks are a potential catalyst for shares.
The $5 price target is based upon an EBITDA multiple of 17.9x on 2015 with a 3 year growth rate of 20%. In late Monday trading right at the closing bell, Sirius XM’s stock was up 1% at $3.42 against a 52-week range of $2.98 to $4.18.
Top Gaining Stocks
Top Losing Stocks