Sirius XM's Penny Stock Days Are Over, Poll Says

Sirius XM stock has received its share of flack the past year for trading in "penny stock" territory -- but a poll by TheStreet finds that investors believe those days are now ancient history for SIrius XM.
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(Sirius XM story updated with share price movement and analyst commentary.)
NEW YORK (TheStreet) -- After closing above a dollar for 10 straight days, Sirius XM (SIRI) - Get Report stock has regained compliance with NASDAQ listing requirements -- so, we asked TheStreet users: "Now what?"

And the verdict was clear: While Sirius XM stock has gotten its share of flack the past year for trading in "penny stock" territory, many investors apparently believe that those days are long gone. Sirius stock, according to 75.4% -- or 1,207 -- of those we polled, will continue to show more upside potential and begin drawing in institutional investors.

Meanwhile, 22.4% of the investors we polled believe that Sirius stock will continue to show more upside potential, but remain a high-risk play. A mere 2.2% of respondents said they believe that, as the result of another round of auto-sector weakness, Sirius XM shares will suffer.

The price targets for Sirius XM are varied, hitting figures such as $1.30 and $1.50 -- subject to revision after Sirius XM makes its first quarter announcement on May 4; Sirius XM stock settled at $1.18 Friday, down 1.9%.

Its shares are trading up 1.9% at $1.20 Monday morning.

BGB Securities analyst Murray Arenson expects solid first-quarter operational data for Sirius XM. "We believe the company outlook continues to be strong, with solid auto sales data, an improving balance sheet, and elimination of the NASDAQ listing/reverse-split question," Arenson wrote in an investor note.

The stock recently broke through Arenson's $1.15 price target, which is subject to review pending Tuesday's earnings call.

A good example of today's Sirius XM investor can be found in Burleson, Texas, in the form of retail investor Ron Reed. Reed, whose initial Sirius XM investment has nearly tripled, told

Reuters

that he's in the stock for "the long haul."

Reed purchased the stock about a year ago at 42 cents a share, and had at some point considered selling off the shares when it made only 60 cents by the end of 2009, rather than the ballpark $2 he'd been hoping for, he told

Reuters

. But with the company's strengthening fundamentals gaining more notice each day, Reed says his doubts about Sirius XM seem to have largely faded away.

On Apr. 28, Sirius XM announced that the company is retiring $114 million of debt. It said that on June 1, the company will redeem all of its outstanding 10% senior PIK secured notes due 2011 at a redemption price of 100% plus accrued interest.

"Our strong cash position, strong first-quarter subscriber growth and the improving outlook for the economy have put us in position to retire these notes a year ahead of schedule," SIRIUS XM CFO David Frear said. "The early retirement of these notes will reduce interest expense and increase our free cash flow."

Whether you still think that Sirius XM stock "would be a great short, except it's not worth anything!," as one recent reader of TheStreet commented on

TheStreet

; or you believe that "Siri will be at $2.50 by year-end," as another predicted, Sirius XM investors who are tired of hearing their stock being put down are undoubtedly feeling some sense of vindication by now.

-- Reported by Andrea Tse in New York

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