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Why Sirius XM Holdings Stock Rose 12% in July

By Joe Tenebruso - Aug 4, 2019 at 3:25PM

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The audio entertainment leader raised its revenue and earnings forecast for 2019.

What happened

Shares of Sirius XM Holdings (SIRI 1.15%) jumped 12.2% last month, according to data from S&P Global Market Intelligence, in part because of the satellite radio and streaming music provider's strong second-quarter results.

So what

Sirius XM's stock entered July with some momentum following an analyst upgrade in June. On June 10, Credit Suisse analyst Brian Russo upgraded Sirius from "neutral" to "outperform" and placed a $7 price target on its stock. "We believe it more likely than not that management will beat its guidance, and therefore see upside to consensus for the remainder of the year," Russo said at the time. 

That call proved prescient. On July 30, Sirius XM delivered revenue and earnings that beat Wall Street's expectations. The company's second-quarter revenue, which was boosted by its acquisition of internet radio service Pandora, surged 38% year over year to $1.98 billion. That was above analysts' estimates for revenue of $1.94 billion. Sirius XM's earnings per share, meanwhile, came in at $0.06 per share. That, too, was above analysts' estimates, which had been for EPS of $0.05 per share. 

"Our company produced outstanding financial and operating results once again this quarter, and I'm pleased by the quick progress we've made in integrating Pandora," CEO Jim Meyer said in a press release. 

A person putting two digital puzzle pieces together

Sirius XM's integration of Pandora is progressing nicely. Image source: Getty Images.

Now what

Based on these strong results, Sirius XM lifted its full-year guidance for revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). The company is now guiding for pro forma revenue of $7.8 billion and adjusted EBITDA of $2.35 billion, up from a prior forecast $7.7 billion and $2.3 billion, respectively. 

In addition, CFO David Frear said Sirius XM is committed to passing on a significant portion of these profits to investors through dividends and share repurchases. "We will continue to use our strong financial position and ample liquidity to invest in our business, make strategic investments, and return capital to stockholders," Frear said.

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