Two big Wall Street firms weighed in Tuesday on investors' hopes for a merger of satellite radio outfits Sirius (SIRI) and XM (XMSR).

JPMorgan upgraded Sirius and XM to overweight from neutral, saying satellite radio is well on its way to becoming a standard feature in new cars. The firm said the companies' growth prospects are cooling but remain strong, with tens of millions of subscribers due to be online by 2010. It said a merger is possible this year but that regulators aren't certain to go along.

Banc of America Securities downgraded XM to neutral from buy, saying there's significant risk if the Washington-based company doesn't pull off a merger with New York-based Sirius. Banc of America also said a merger would take years to fully integrate.

Shares in both companies have rallied in recent weeks as deal chatter has grown ever louder. The news comes after a year in which both companies pulled back on their subscriber growth forecasts and pledged to keep a lid on costs as their shares fell.