NEW YORK (TheStreet) -- Sirius XM (SIRI) has received another vote of confidence this week, this time from Evercore which reinstated an "overweight" rating on the satellite radio company in the aftermath of the failed buyout attempt from Liberty Media (LMCA).
Merill Lynch reinstated its "buy" rating for the company on Friday with a price target of $5. Macquaire also recently upgraded Sirius' price target to $4. Sirius opened the day trading at $3.49 and has ranged between $3.39 and $3.49.
The proposed Liberty Media deal would have valued Sirius XM at $23 billion at $3.68 a share. As of the end of 2013 Sirius -- the world's largest pay-radio service -- boasted 25.6 million subscribers. Steady growth in the number of its subscribers has allowed the company to post increased earnings for each of the last four years.
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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 several positive factors, 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 and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SIRI's revenue growth has slightly outpaced the industry average of 4.2%. Since the same quarter one year prior, revenues rose by 12.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $358.58 million or 22.28% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.41%.
- The gross profit margin for SIRIUS XM HOLDINGS INC is rather high; currently it is at 60.37%. 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 6.51% trails the industry average.
- SIRIUS XM HOLDINGS INC's earnings per share declined by 50.0% in the most recent quarter compared to the same quarter a year ago. 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 ($0.09 versus $0.06).
- 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