Wunderlich Securities Sees Optimistic Forecast for Sirius XM Holdings

In a report published Wednesday, Wunderlich Securities analyst Matthew Harrigan reiterated a Hold rating and $3.50 price target on

. In the report, Wunderlich Securities noted, “Yesterday after the close Hold-rated Sirius XM Radio (SIRI) increased guidance for net 2014 subscriber additions to 1.45mm from 1.25mm, while leaving the self-pay expectation intact at 1.25mm. The increase is not surprising given strong U.S. auto sales and benefit for paid promotional subscriber activity, complemented by Sirius XM's emphasis on volume activity vs. pricing. Guidance for $4.1bn in sales, adj. EBITDA near $1.425bn and free cash flow of $1.1bn was also left unchanged. The lynchpin for 2020E EBITDA (and 2015 valuation) remains annual customer adds, inclusive of reactivated radios, and pricing. We estimate that 1.4mm annual adds with 2% ARPU growth through 2020 implies only $3.55 2015 value, an optimistic forecast with upside of only five cents beyond WSI's $3.50 target.” Sirius XM Holdings closed on Tuesday at $3.57.