Sirius XM Radio (SIRI) PT Raised to $8.25 at Pivotal Research on Better Than Expected Sub Growth

Pivotal Research analyst Jeffrey Wlodarczak raised the price target on Sirius XM Radio (NASDAQ: SIRI) to $8.25 (from $8.00) after the company added +341K (-18% y/y) net new self-pay subscribers in 4Q19 vs. expectations for +276K. Guidance for 2020 was for "over 900K” self-pay net subscriber additions which is in line with the expectation of +905K. Guidance for adjusted EBITDA and free cash flow of approximately $2.5B and $1.7B were slightly below expectations for $2.6B and $1.74B but close to in line.

The analyst reiterated the Buy rating stating "In our view the most likely scenario is for SIRI to continue to deliver operationally and retire stock aggressively driving Liberty’s (LSXMA, BUY) ownership to 80% (from the current ~71%) then SIRI may swap to a much more aggressive dividend strategy (as dividend’s at the 80% ownership level will be tax free to LSXMA) and LSXMA will utilize the cash to take advantage of the current very attractive 30% discount to NAV (which is entirely in SIRI shares)".

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