(Updated with corrections and information directly from analyst report)
NEW YORK (
Sirius XM Radio
shares soared in midday trading Monday after
Bank of America Merrill Lynch
initiated coverage of its high-yield bond, pointing out its investment attributes.
Sirius, which offers commercial-free satellite radio programs, jumped by 5% to 60 cents.
Sirius's investment attributes, according to the Bank of America Merrill Lynch, include Sirius's ability to survive an economic downturn much better than its ad-depending peers through its subscription-based business model; a sizable subscriber base; a still relatively small (less than 10%) penetration rate of the entire domestic automobile base -- amid growing OEM penetration -- with the used car market providing additional opportunity; a credit trajectory at a favorable inflection point, with enhanced benefits likely accruing over time, given reduced post-merger competition; and strategic asset value.
Bank of America Merrill Lynch says that Sirius will "handily exceed" its initial 2009 EBITDA guidance of $300 million, while mentioning that possible near-term headwinds may still include lingering economic issues and weakness in OEM production.
Sirius's industry peers have been trading in mixed territory with
trading up 6.3% to 2 cents and
trading down 1.3% at $2.30.
remains flat at $4.50.
-- Reported by Andrea Tse in New York
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