Maxim Group Lifts Price Target on Sirius XM Radio (SIRI); Sees Increased Leverage, Share Buyback Upon Liberty Media Control

October 9, 2012 8:58 AM EDT
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Price: $4.59 --0%

Rating Summary:
    15 Buy, 9 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 14 | Down: 24 | New: 13
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Maxim Group boosted its price target on Buy-rated Sirius XM Radio (NASDAQ: SIRI) from $3.35 to $3.80 saying they are anticipating the leveraging of SIRI - 4.0x net debt to EBITDA and anticipating potentially $6.66B in buyback.

"We were previously assuming a strong buyback with SIRI CEO Mel Karmazin — ~1.65B shares by the end of 2014 or ~25% of the shares outstanding (especially given his history of taking the original Infinity Radio private)," analyst John Tinker notes. "Liberty Media expected to take control of the company subject to receiving FCC permission, appears to be more aggressive. Accordingly, we are now assuming that SIRI may be leveraged 4.0x net debt to EBITDA and buy back 2.22B shares by the end of 2014— about 34% of the shares outstanding. We are maintaining our EBITDA growth assumptions of 27%/26%/24% in 2012/2013/2014 to $928M/$1,170M/$1,453M. We are raising our free cash flow per share growth rates to 76.9% / 70.2% / 48.9% to $0.113 / $0.193 / $0.287."

The new $3.80 price target is based on 20x the firm's new FY13 FCF/share of ~$0.193, from the previous FY13 FCF/share estimate of ~$0.167.

For an analyst ratings summary and ratings history on Sirius XM Radio click here. For more ratings news on Sirius XM Radio click here.

Shares of Sirius XM Radio closed at $2.67 yesterday.

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