"Even as competition within the car accelerates, we maintain a Hold rating on Sirius XM Radio (SIRI)," the firm wrote in a research note. "The lynchpin for potential 2020 operating income (and 2014 price target) remains annual customer additions, inclusive of reactivated radios, and pricing power.
"Google's new acquisition of Songza and Apple's purchase of Beats show that competition is gradually gravitating toward full ecosystem players more so than current music-streaming only entrants such as Spotify or even Pandora's 'Music Genome.' Yesterday, Apple also announced nine more CarPlay partners, including Audi, Chrysler, Dodge, and Mazda. With both Google and Apple courting global car makers, OEMs are now likely to pair Android and iOS capabilities."
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The stock was up 0.73% to $3.46 at 10:41 a.m.
TheStreet Ratings team rates SIRIUS XM HOLDINGS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SIRIUS XM HOLDINGS INC (SIRI) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 14.6%. Since the same quarter one year prior, revenues rose by 11.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- Net operating cash flow has increased to $251.39 million or 48.82% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.61%.
- The gross profit margin for SIRIUS XM HOLDINGS INC is rather high; currently it is at 60.86%. Regardless of SIRI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.42% trails the industry average.
- SIRIUS XM HOLDINGS INC reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, SIRIUS XM HOLDINGS INC reported lower earnings of $0.06 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($0.08 versus $0.06).
- The change in net income from the same quarter one year ago has exceeded that of the Media industry average, but is less than that of the S&P 500. The net income has decreased by 23.9% when compared to the same quarter one year ago, dropping from $123.60 million to $93.99 million.
- You can view the full analysis from the report here: SIRI Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.