This Week in Sirius XM Radio

Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ: SIRI  ) hit a multiyear high during the week before shedding 3.1% of their value to close out the week at $3.70. The media darling's slide was worse than the Nasdaq's 2.2% decline on the week. 

There was more going on beyond the share-price gyrations, though. Sirius XM also announced an intriguing acquisition that makes it a bigger player in telematics, and a Goldman Sachs upgrade sent Pandora (NYSE: P  ) to a new 52-week high, as the streaming music bellwether gears up to post its latest quarterly results.

Let's take a closer look.

Sirius XM is a road hog
With improving cash flows and billions in net operating losses that it can use to offset future taxable profits, it was just a matter of time before Sirius XM made a material acquisition. This week it announced that it will pay $530 million for Agero's connected-vehicle-services business.

That's a lot of money to pay, but the deal will make Sirius XM a bigger player in telematics. The satellite-radio provider has decided that the best way to increase its revenue is to expand across the dashboard to other premium services. Te deal will find Sirius XM building on its relationships with many leading auto manufacturers, and ideally increasing the amount of revenue it can generate from each driver. 

High times
Sirius XM hit $3.85 on Monday, and again on Tuesday. You have to go all the way back to March 2008 to find the last time the stock traded this high.

The highs didn't stick, though, as Sirius XM succumbed to the selling on the market. Falling all the way down to its $3.70 close will make it that much harder to revisit these five-year highs. 

Cracking open Pandora's box
Goldman Sachs analyst Heath Terry upgraded Pandora's stock rating from "neutral" to "buy" on Friday, slapping an ambitious $27 price target on the shares.

He now sees Pandora earning $0.20 a share this year, well ahead of the $0.02 he was originally targeting and the $0.04 that currently stands as Wall Street's consensus. Terry's perspective has changed as Pandora's revenue has started to grow faster than its content costs.

Pandora reports quarterly results on Thursday, so we'll see whether Terry's upgrade was either timely or unfortunate.

A Sirius future
It was an interesting week for Sirius XM. The new week isn't likely to be dull.

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  • Report this Comment On August 17, 2013, at 9:26 AM, Austin77478 wrote:

    Rick,

    "Falling all the way down to its $3.70 close will make it that much harder to revisit these five-year highs."

    I disagree with you on this quote. If the overall market rebounds in the following weeks, Sirius will test the high again.

  • Report this Comment On August 17, 2013, at 1:01 PM, Scottgisme1 wrote:

    Yes Rick, I suppose your wording about SIRI "falling all the way down to its $3.70 close will make it that much harder to revisit these five year highs," conveys your negative spin in the short term. First, why is falling 15 cents from a 52 week high ($3.85 down to $3.70) going to make it that much "harder to revisit these five year highs?" Is the stock to just go straight up and never pause for consolidation? Have they quit the buy back program? Have the analyst dropped any of their $4-$5 price targets? Is the company getting larger or smaller? Are revenues and free cash flow expanding or shrinking? Is John Malone holding or selling those "high basis" shares? C'mon Rick.... Why is the glass always " half empty?"............ Your article should have read, "SIRI shares take a brief and minor pause after a tremendous run up from the 5-10 cent range, just four years ago. With analyst price targets in the $4.25-$5.00 range, growing the telematics business through such acquisitions as buying Agero, expanding their share but back program, and keeping in mind that Mr. Malone choses to hold on to those " high basis" shares, all points to the notion that share value of SIRI will continue to increase. Finally, if the company can reduce their float by 50% over the next several years through continuing an aggressive buy back plan, given its current market cap of nearly 24 billion dollars, SIRI would be an $8 stock. So investors, this minor pull back is healthy and normal for a stock that is running up like SIRI has over the last five years and with the company now "firing on all cylinders," expect the upward momentum to continue as long as the story remains the same." Now.... Doesn't that sound more like what's really going on here? C'mon Rick, don't make us have to write (or right) this stuff for you!

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