This Day On The Street
Continue to site
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

Now at Liberty, Sirius Is Dogged by Questions

NEW YORK ( TheStreet) -- Investors are rejoicing that Liberty Media (LMCA) is no longer interested in buying the remaining portions of Sirius XM (SIRI - Get Report) it doesn't already own. Sirius closed Friday at $3.44, up over 2% from Thursday's close of $3.37 although down 1.4% for the year to date.

Investors, including consumer advocate and one-time presidential candidate Ralph Nader, believed they were being lowballed on the price offered by Chairman John Malone, whose Liberty Media has a 53% stake in the satellite radio company. Malone offered $3.68 a share in January to buy out the rest of the company.

With Liberty out of the picture for now, Sirius didn't waste any time taking control of the story. The company said it's resuming its $2 billion share repurchase program, which was put on hold pending a resolution to Liberty's offer. The company also reaffirmed its guidance for 2014.

Aside from projecting 1.25 million in net subscriber additions of 1.25 million, management held firm to its revenue target of over $4 billion. The key metrics in the equations, however, is Sirius projected free cash flow of $1.1 billion. The strong cash flow, in my opinion, was the main driver of Liberty's bid. What's more, it is this cash flow that will fuel Sirius' ability to resume its share buyback program.

Meanwhile, John Malone has shifted gears and is looking to spin off Liberty into dual tracking stocks. Reports suggest a new Liberty Broadband tracker will include various entities, including prior positions in Time Warner Cable (TWC) and Charter Communication (CHTR), in which it owns roughly a 25% stake.

It's not yet clear what Liberty's future intentions will mean for Sirius. But the company hasn't completely closed the door on revisiting the idea of full ownership. What is clear, however, is that investors and analysts are pleased with this outcome.

One in particular is Jessica Reif Cohen, analyst at Bank of America. On Friday, Cohen issued a buy rating on the stock and placed a price target of $5. From Friday's close of $3.44, this represents a 45% premium, which makes Sirius significantly undervalued.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SIRI $3.95 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs