Citi Starts Sirius XM Holdings (SIRI) Credit at Overweight

Citi initiated coverage on Sirius XM Holdings Inc. (NASDAQ: SIRI) credit at Overweight. Analyst David Phipps models Q2 sales of $1.02 billion and $353 million EBITDA. Conservatively, 2014/2015 sales growth is seen at 9%/6%.

"Sirius unsecured credit trades near Citi’s High Yield index and 50bp inside Citi’s Media & Entertainment index. We believe SIRI has better credit fundamentals than either index. SIRI generates enough free cash flow to repay all of its debt within five years, although we expect cash could repurchase shares. SIRI’s equity value covers total debt by over 4x providing material asset coverage. SIRI’s sales and free cash flow have grown at least high-single-digits for the past four years," said Phipps.

"We initiate with a Buy rating on SIRI’s 5.75% notes due 2021 and the 6% notes due 2024 . . .We initiate with a Neutral rating on SIRI’s 4.25% notes due 2020, the 5.875% notes due 2020, and the 4.625% notes due 2023. . . We initiate with a Sell rating on SIRI’s 5.25% 1st lien notes due 2022."

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