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SiriusXM Drives Straight Race to $3 a Share

"From a fundamental perspective, SIRI is growing faster than any company in our media universe," wrote Cohen in a note to clients. Bank of America gives SiriusXM shares a price target of $4 a share, a more than 40% rise from current levels.

The analyst projects SiriusXM's annual revenue, EBITDA and free cash flow growth will rise steadily in the coming years to reach 47% by 2016, as auto sales grow faster than expected and the company begins to tap the used car market. By 2017, Cohen notes SiriusXM's satellite ratio service may be in 100 million cars, roughly double its present installed base.

Meanwhile, the company may now have the right kind of leverage after debt burdens put it on the brink of bankruptcy in 2009. Specifically, SiriusXM may create earnings leverage for shareholders by financing up to $3 billion in share repurchases, calculates Cohen.

Also in October, Kraft of Evercore Partners upgraded SiriusXM's price target to $3.20 a share from $2.80, citing improved projections on subscriber adds in coming years. Kraft now projects SiriusXM will add between 1.8 million and 1.9 million new subscribers through 2014.

"We continue to believe that a multi-year recovery in auto sales and an expanding total addressable market will fuel subscriber growth in the high-single digit percent range and lead to upside to investors' expectations," wrote Kraft in a Monday note to clients.

Optimism on SiriusXM comes amid a well-publicized dance between the company and its largest shareholder, John Malone-run Liberty Media (LMCA - Get Report). Liberty Media takes a controlling stake in SiriusXM, expanding on a large minority investment it made in the company when it was teetering on bankruptcy three years ago.






After Liberty Media built its stake in SiriusXM to 49.5% in September, SiriusXM CEO Karmazin was seen as on his way out, in a move that was finally announced in late October.

Still, in September, Kraft of Evercore Partners noted that the prospect of Liberty taking control of SiriusXM in the near-term is remote - and analysis indicates investors may do better to remain focused on the company's earnings trajectory.

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