UPDATE: Pacific Crest Securities Initiates Coverage on Sirius XM Radio as Near-Term Execution Offsets Competitive Concerns for Now

In a report published Wednesday, Pacific Crest Securities analyst Corey Barrett initiated coverage on Sirius XM Radio SIRI with a Sector Perform rating. In the report, Pacific Crest Securities noted, “We are initiating coverage of SIRI at Sector Perform; we estimate 12-month fair value at $3.00 to $3.80. Our fair value range is based on 12x to 15x NTM EV/EBITDA, plus estimated NOL present value. Subscriber conversions and retention are key to the stock for the long term, in our view. Competition from Internet radio should increase dramatically in 2014, creating risk to long-term growth outlook and SIRI. As in-car connectivity expands rapidly across automaker lineups in 2H2014, competition from Internet radio could pressure Sirius XM's conversion rate to self-paying subscribers and eventually drive self-pay churn higher. Evidence of such a scenario would likely prompt a more negative view of shares, as slowing growth would likely drive multiple compression.” Sirius XM Radio closed on Tuesday at $3.68.