We upgrade our recommendation on
SIRIUS XM Radio
) to Outperform based on its record-high net subscribers addition
in the second quarter of 2012. This improved performance was mainly
due to strong management execution on the back of rising auto
We expect the company to improve in several other operational
metrics, including adjusted EBITDA, free cash flow and further
penetration in the U.S. auto sector, in the second quarter. Despite
price rise of its services, SIRIUS XM has generated record-breaking
net subscribers growth in the last two successive quarters. Solid
conversion rate and effective marketing strategy helped the company
to achieve this milestone.
Management predicted that this momentum will further intensify in
the rest of fiscal 2012 and accordingly raised its prior guidance
for fiscal 2012 revenue and net subscribers growth. Further,
Satellite Radio 2.0 services will also boost its future financials.
SIRIUS XM RADIO (SIRI): Free Stock Analysis
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