Piper Jaffray Initiates Coverage on Sirius With Buy Rating and $2.50 Price Target
Piper Jaffray initiated coverage on Sirius XM Radio (NASDAQ: SIRI) with a Buy rating and $2.50 price target on Tuesday. The analysts wrote, "we believe the company remains well-positioned to monetize its substantial listener base as scale moderates expenses." The also added that Sirius' "premium content at a premium price" model is poised to deliver substantial EBITDA and free cash flow. The result of improving cash flow, according to Piper Jaffray is likely a large buyback.
They wrote, "we believe a substantial share buyback could be announced before year-end, possibly approaching $1B." On Tuesday, SIRI shares have added a little less than 2% to $1.87. Piper Jaffray described the company as having the "best moustrap" in regard o to its monetization model in its industry.
In recommending the stock, they pointed to the company's "solid per listener metrics, exclusive non-music programming , limited exposure to more competitive music formats, access to a private end-to-end satellite network, moderating non-programming costs, good operating leverage and diminishing capex." At current levels, SIRI has a market cap of over $7 billion. In 2012, the shares have added a little better than 2% and over the last year, SIRI is down around 7%.
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