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Sirius XM Guidance: Mixed Reviews

Analysts react to Sirius XM's full-year guidance earlier this week with mixed views, ranging from bullish to outright skeptical.

NEW YORK (TheStreet) -- Analysts have reacted to Sirius XM's (SIRI) - Get Sirius XM Holdings, Inc. Report fine-tuned 2010 guidance, offered up by the company on Monday, with views that range from bullish to outright skeptical.

On the optimists' side sits Murray Arenson, an analyst at BGB Securities, who raised his target numbers for Sirius's 2010 results in response to the company's outlook.

Already more aggressive with his EBITDA expectations than the company itself, Arenson now thinks Sirius can post adjusted earnings before interest, taxes, depreciation and amortization of $583 million, up from his previous forecast of $572 million.

Arenson also revised his per-share earnings target to breakeven, up by from a projected loss of a penny, but left revenue forecast basically unchanged at $2.8 billion. He has maintained his buy recommendation on Sirius stock, while noting that the company's cash flows for the year will be greatly driven by the pace of new car sales and the subscriber acquisition costs related to those sales.

Meanwhile, Marek Fuchs, former money manager, author of

A Cold-Blooded Business

and a contributor to


, isn't sold on the stock as result of Sirius XM's raised guidance. "It's better than nothing certainly, but it's no long-term testament to the viability of satellite radio," he said.

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The company, which appears to have

successfully fended off a once-feared delisting

, still faces several challenges, Fuchs said, issues that are familar to any Sirius bear. First, he said, satellite radio is expensive since it's main competition is free radio: "From newspapers on, that is never a good proposition." Further, the competition for radio audiences is growing fiercer with the arrival of other new technologies, Fuchs said.

"It's not like they found a magic bean to stay viable," he said. "It's just that car sales did OK versus stuck-in-the-mud comparisons last year."

Tuna Amobi, an analyst at Standard & Poor's, who has a hold rating on shares of Sirius XM, wrote in a research note that he wasn't surprised by the company's fresh quantitative outlook for 2010.

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That's because earlier guidance from the New York company seemed conservative to him, Amobi wrote, given the pace recorded by Sirius in the first quarter a year ago.

The analyst also noted that the companys' fortunes largely depend on the outlook for autmobile original equipment manufacturers.

On Monday, Sirius XM said it expects net subscriber additions of about 750,000 in 2010, compared with earlier guidance of "more than" 500,000.

The comapny also fine-tuned its 2010 targets for pro forma revenue to $2.75 billion from "more than" $2.7 billion and its adjusted income from operations to $575 milllion from $550 million.

Sirius said free cash flow for 2010 will amount to more than $100 million, which would be down sharply from 2009's figure of about $185 million. Previously, the company had made statements about generating "positive" free cash flow for the year.

Sirius shares were trading midday Wednesday at $1.03, down 6 cents, or 5.5%, on volume of 37 million shares. Daily turnover over the last three months has averaged around 147 million shares.

-- Reported by Andrea Tse in New York


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