NEW YORK (TheStreet) -- Sirius XM (SIRI) gained 2.3% to $3.58 on Friday after Evercore upgraded the satellite radio company to "overweight" from "equal weight" and increased the company's target price.
Analysts Bryan Kraft and Preeti C. Doshi increased Sirius XM's target price to $4.50 from $3.90. The analysts predicted "rapid growth in 2014 and beyond" for the company. There is potential for Sirius to generate $700 million in telemetrics revenue in 2018, and $3.1 billion in telemetrics revenue in 2025, according to Kraft and Doshi.
The Evercore analysts acknowledged that Sirius has underperformed the S&P since its last earnings report in October, and said the current stock price "fairly values the core business." They argued, however, that the satellite radio company's "core business should continue to grow at a healthy rate."
TheStreet Ratings team rates SIRIUS XM HOLDINGS INC as a Buy with a ratings score of B. TheStreet Ratings Team said this about its 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, expanding profit margins, increase in stock price during the past year and notable return on equity. 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:
- The revenue growth came in higher than the industry average of 2.8%. Since the same quarter one year prior, revenues rose by 10.9%. 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 $302.24 million or 37.49% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 14.00%.
- The gross profit margin for SIRIUS XM HOLDINGS INC is rather high; currently it is at 65.01%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.54% trails the industry average.
- SIRIUS XM HOLDINGS INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SIRIUS XM HOLDINGS INC increased its bottom line by earning $0.53 versus $0.07 in the prior year. For the next year, the market is expecting a contraction of 86.8% in earnings ($0.07 versus $0.53).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: SIRI Ratings Report