It's been two weeks since Citi analyst Jason Bazinet downgraded Sirius XM Holdings (SIRI 0.37%). He is lowering his rating on the shares from buy to neutral, sticking to his earlier price target of $6.65 that he now feels may not be surpassed until 2020.

The satellite radio provider being stuck literally and figuratively in neutral may come as a shock to investors. Sirius XM has spoiled its shareholders. The stock has moved higher every year since 2009, and the platform's popularity, revenue, and profitability have continued to expand with every passing year. However, Bazinet argues that the market will pare back the premium it bestows on the stock as its free cash flow growth decelerates in the coming years.

Dolly Parton at a Sirius XM media event.

Image source: Sirius XM Holdings.

Sizing up the satellites

Citi's Bazinet sees free cash flow per share topping 20% growth this year and again in 2019, slowing to the teens come 2020. He feels that the multiple the market will be willing to pay for Sirius XM's levered free cash flow will contract from 20 to 18 in light of the deceleration, leading him to conclude that a stock price of $6.65 will be the ceiling for the next two years.  

Bazinet has been covering Sirius XM for years, and he's not bearish on the platform. He actually stuck with his buy rating on Liberty SiriusXM (LSXMA -0.36%), suggesting that it remains a thinking investor's way to buy Sirius XM at a discount. 

Bazinet isn't the only one who's been talking up Liberty SiriusXM over owning Sirius XM Holdings directly. Analysts at Deutsche Bank, B. Riley FBR, and Buckingham have also put out bullish notes on Liberty SiriusXM, trading at a roughly 20% discount to its Sirius XM Holdings stock. However, Bazinet downgrading Sirius XM while keeping a bullish stance on Liberty SiriusXM is notable. He can also be wrong on the neutral rating.

Sirius XM keeps growing. Growth has been modest but steady in recent years. Guidance calls for just 5% in revenue growth this year -- following an 8% advance in 2017 -- but Sirius XM has historically put out a low outlook that it can inch higher as the year plays out. Since Sirius XM is armed with 32.7 million subscribers, it's hard to bet against the premium radio leader. 

Bazinet deserves credit for singling out the free cash flow growth on a per-share basis. Sirius XM has been a various buyer of its stock in the past, propping up all of the per-share metrics. With its stock recently hitting 12-year highs, its commitment to paying out a quarterly dividend, and new investment opportunities that may arise, it wouldn't be a surprise if the outstanding share count shrinks at a slower pace. The fundamentals remain strong at Sirius XM, and while investors shouldn't expect future gains to follow the script of the last nine years of scintillating gains, it's OK to believe that $6.65 -- a gain of less than 6% off current levels -- isn't the ceiling.