Barrington Research: Sirius XM Execution Remains On Track

James Goss of Barrington Research reiterated an Outperform rating on Sirius XM Holdings Inc. (NASDAQ: SIRI) with a price target lowered to $4.25 from a previous $5.00.Self-pay churn was 1.9 percent during Sirius XM's third quarter, while conversion rate remained above 40 percent for new cars and in the low 30s for used cars. Sirius XM reported that its new car penetration has risen to 70 percent, but the company sees tremendous benefits in the used-car market as 65 million cars are currently equipped with satellite radios. The company sees this figure ballooning to 120 million cars in five years and 150 million in 10 years.“While the used car opportunity offers the most clear-cut growth opportunity, several other elements also add to future growth potential,” Goss wrote in a note to clients on Friday. “Programming initiatives include added emphasis in the country music genre plus programming involving the Today show as well as talent as diverse as Jenny McCarthy, Barbra Streisand, Pit Bull, and Joel Osteen. Connected vehicles opportunities remain in the mix, addressing safety, security, and convenience.”Goss notes that Sirius XM's has a “high and increasing” free cash flow generation that could be coupled with cash borrowings and could translate to a noticeable return of capital to shareholders. In fact, the company saw its borrowing costs decline by more than 400 basis points over the past two years, resulting in a commitment from management to buyback additional shares.