By Brandon Matthews
This Wednesday, November 11 2009, Satwaves has scheduled an exclusive interview with senior media and entertainment analyst Tuna Amobi of Standard & Poor’s U.S. Equity Research Services. Mr. Amobi will discuss his current outlook on shares of Sirius XM Radio (SIRI). The interview can be heard exclusively on Satwaves Radio via Blogtalkradio, which airs every Wednesday at 9:00 pm EST. Last week, Mr. Amobi had affirmed his HOLD rating on SIRI shares and $1.00 12 month price objective:
Before $0.04 charge, Q3 breakeven, on 43% more shares, vs. $0.71 loss, matched our estimate, beat Street’s $0.08 loss. Reversing sharp H1 losses, Q3 net adds of 102,295 was better than we expected, on rebounding auto units, vs. continued anemic retail channel. Other metrics seemed mixed. With cost control, SIRI affirms $400M ‘09 adjusted EBIT, sets 20% growth in ‘10, on mid- to high-single digit revenue gain, with some subscriber growth. We note high interest expense (on refis), potential reverse split on exchange de-listing overhang. We keep our EV/sales target price at $1.00.
I had anticipated an equity upgrade from hold to buy from Standard & Poors following the recently reported Q3 earnings results from Sirius XM. I am looking forward to an updated report to be released as the current report available from S&P is based largely on now outdated metrics. As an example, the current report indicates 2009 subscriber totals to come in at 18.2 million. Sirius XM has already exceeded 18.5 million in the third quarter, and the fourth quarter traditionally is Sirius XM’s strongest quarter of the year with regard to subscriber additions.
A recent article by BusinessWeek quotes Mr. Amobi as stating that Sirius XM should add 200,000 subscribers in Q4, which would bring year end subscribers to over 2.7 million. For 2010, the current S&P report suggests a target of 18 million subscribers, yet the same BusinessWeek article quotes Mr. Amobi projecting Sirius XM to add 300,000 subscribers to its rolls next year. This suggests a 2010 year end target of 19 million subscribers rather than the currently projected 18 million that the current HOLD rating is based upon.
Other metrics such as cash flow breakeven, 3 consecutive quarters of operating profit and positive cash flow may result in a new model that suggests the potential for an equity upgrade. Could one be announced? Tune in to Satwaves Radio this week to find out.
Position: Long SIRI
Look forward to the NEXT SATWAVES blog Radio AND Mr. Tuna Amobi comments
Sure, bring him on. We’ve until February to be entertained with more BS just to “Keep me hanging on”.
Sure, bring him on. We’ve until February to be entertained with more BS just to “Keep me hanging on”.
Remember, you can tune a piano but you can’t
“Tuna Fish”.
theflyonthewall.com: Sirius XM Radio price target raised to $1.25 at Barrington
Barrington raised its price target on Sirius XM Radio shares to $1.25 as it found the company’s quarter better than expected “on a number of trends.” The firm reiterates an Outperform rating on the stock. :theflyonthewall.com
That’s great news! Although I believe he is not a very good media analyst (maybe he covers technology, I am not sure). I will listen to the replay
Brandon – Please ask him these 2 important questions.
1. Why did he predict for 1 years time that the Sirius XM merger would not be approved, and from what I recall even before then he originally predicted it wouldn’t even be attempted?
2. Why does he use EV/sales instead of EV/EBITDA in valuation like every other media analyst?
Thanks!
muscle…
past is past…not going there..
on your second point I think i can answer that…because he categorizes sirius XM not in media but in other sub based businesses such as comcast and direct tv
The BS has begun. Bullshitter’s run your motormouth’s. “The past is the past”, what kind of freekin answer is that. This guy’s so full a shit his eye’s are brown.
Brandon – Comcast, DirecTV, Echostar and all the cable companies are valued on EV/EBITDA by all the media analysts. Check out all the current and past reports.
My guess is Amobi is more of a tech analyst but I am really not certain. I heard Demian once mention that Amobi covers Apple which makes me suspect he is tech. But I also have heard he covers Time Warner which is media
I am really curious about the EV/Sales valuation. It’s an interesting calc. Never saw it before as primary valuation in media. Have seen it as secondaty, not primary. Primary has always been EBITDA and secondary is usually Free Cash Flow.
I know its might be off topic but, Any rumors leak out of what the advertising campaign on the 15th might include? Celebrities,Tv,Print ?