We reaffirm our Neutral recommendation on
SIRIUS XM Radio Inc.
). The company reported mixed financial results for the first
quarter of 2013. While net income was exactly in line with the
Zacks Consensus Estimate, revenues fell below the same.
Why the Reiteration?
SIRIUS XM broadcasts music, sports, news, talk, entertainment,
traffic and weather news in the U.S. and Canada for a
subscription fee, through its proprietary satellite radio systems
- the SIRIUS system and the XM system. The merger between SIRIUS
Satellite Radio and XM Satellite Radio in 2008, the two erstwhile
competitors, generated significant business synergies for the
SIRIUS XM is largely dependent on the growth of the U.S. auto
industry. The company holds an estimated 70% market share of the
new cars sold in the face of growing competition from
Pandora Media Inc.
) and Spotify. Therefore, even a minor fluctuation of auto sales
may significantly affect the company's overall financials.
Management hinted that auto sales may rise at a slower rate in
In order to retain its subscribers, SIRIUS XM introduced an
innovative personalized interactive Internet radio service called
"MySXM" and is expected to maintain its churn rate going forward.
Meanwhile, the stock price has soared by nearly 77% in the last
year. We believe that the stock is currently fairly valued.
Other Stocks to Consider
SIRIUS XM currently has a Zacks Rank #3 (Hold). Other stocks
in the Broadcast Radio/TV industry which are performing well
Entravision Communications Corp.
). Both these stocks currently carry a Zacks Rank #2 (Buy).
BELO CORP (BLC): Free Stock Analysis Report
ENTRAVISION COM (EVC): Free Stock Analysis
PANDORA MEDIA (P): Free Stock Analysis Report
SIRIUS XM RADIO (SIRI): Free Stock Analysis
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