Q3 Preview: Mixed Summer Auto Sales May Pressure Sirius' (SIRI) Quarterly Results

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SIRI Hot Sheet

Rating Summary:
6 Buy, 5 Hold, 1 Sell

Rating Trend: Down

Down

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Up: 0 | Down: 0 | New: 0

Shares of Sirius XM Radio (Nasdaq: SIRI) are lower Monday heading into its third-quarter earnings report, expected out before the market opens Tuesday. Click here to go to Sirius' quarterly presentation, scheduled for 8am Tuesday, November 1st.

The Street sees Sirius reporting earnings of 1 cent on revenue of $764.24 million. Such earnings would be a decline from 3 cents reported last quarter, and 2 cents reported in the same period last year.

Shares of Sirius fell 31 percent through the quarter and are up nearly 20 percent since the end of the quarter. The stock is up 10.7 percent for 2011. Sirius has traded with a range of $1.27 to $2.44 over the last 52-week time frame.

Data from Bloomberg shows seven analysts have a Buy rating on Sirius, four rate the stock a Hold, and one has a Sell. The price target average is $2.25, with a low of $2.00 and high of $2.70.

Sirius usually ends up doing well if auto sales have been strong, with contracts generally offering the service on most major autos for a few months until a subscription is needed. Data shows U.S. auto sales in July rose just 1 percent, August saw an 8 percent jump, and September sales improved 10 percent.

Analyst Comments

Barclays sees earnings of 2 cents per share on revenue of $759.9 million. The firm is also modeling for subs of 21.4 million at the end of the quarter, a net increase of 365,000.
Janco Partners is modeling for diluted EPS of 2 cents, with $764.7 million of adjusted revenue. Janco sees net adds of 393,100, and total subs of 21.416 million at the end of the quarter.

Janco thinks the quarter will be in-line with views, but is becoming more bullish on Sirius' expected price increase starting in 2012. Sirius will increase the price of the base subscription package from $12.95 to $14.49. Janco comments, "Charging $14.49 for the base package will give ARPU a slight lift in 2012, which we have already included in our valuation. We continue to believe that Sirius XM is a compelling investment with plenty of upside and a sustainable model. We are encouraged that the company feels comfortable with raising prices in the face of significant consumer pressures."

Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Sirius' past performance at Streetinsider's Sirius Income Statement.

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