This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Sirius XM Could Touch $4.60 by March

Stocks in this article: SIRI

By Jason Bond of Jason Bond Picks

NEW YORK ( TheStreet) -- Sirius XM (SIRI) stock enthusiasts could be in for a continuation of the bull market in this incredible turnaround story. By the close of 2014 first quarter, I expect SIRI to briefly touch $4.60, a nearly 27% rise in price from Wednesday's close of $3.63.

The rise will be driven by its good fundamentals. Also, a "no change" of the near-zero interest rate monetary policy from the Federal Reserve should provide an additional liquidity lift to the overall equities market, including the highly visible, volume-leading and outperforming stocks.

Strong Fundamentals, a Remarkable Turnaround Story

At a low of 5.2 cents per share in February 2009, the company was all but left for dead, but a $530 million capital injection from behemoth Liberty Media during February 2009 saved Sirius from the clutches of receivership.

Under terms of the agreement, Liberty provided Sirius a $280 million 15% senior secured note during phase one, another $150 million during phase two, and up to $100 million during phase three, for a total of $530 million. From the $530 million proceeds, Sirius retired $172 million of maturing 2.5% convertible notes and paid down $100 million of loans outstanding under terms of its revolving credit facility. The remaining cash of $258 million was used for general corporate purposes.

In return, Liberty received 12.5 million shares of preferred stock convertible to 40% of Sirius' common outstanding. In addition, Liberty occupy two seats on Sirius' board of directors.

Today Sirius has achieved success from the dark days of 2009. Record revenue of $962 million, adjusted EBITDA margin of 30.7% for the 2013 third quarter, and an increase to free cash flow of 26%, are remarkable achievements for a company once trading for a nickel more than three years ago.

It gets better. Sirius may achieve a 34.5% adjusted EBITDA margin for the fourth quarter, according to Sirius XM's third-quarter conference call of October 24. Subscribers are expected to grow by 1.5 million (guidance of 1.6 million by year-end). New-car sales penetration should reach 69% -- including Honda, which expects to introduce SXM 2.0 platform as part of its new contract with Sirius XM. That contract expires in 2020 and will add "20 points" to the penetration rate with Honda (4.1 million vehicles yearly output), according to Sirius XM CEO Jim Meyer.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,810.06 +91.06 0.51%
S&P 500 2,063.50 +10.75 0.52%
NASDAQ 4,712.97 +11.1030 0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs