Sirius XM Radio (Nasdaq: SIRI) got a boost form a positive analyst note today.

Barclays Capital analyst James Ratcliffe is feeling more upbeat about the only game in town when it comes to satellite radio. Ratcliffe's rating on Sirius XM is going from Underweight to Equal Weight. Yes, "Equal Weight" is the equivalent of a neutral rating, but it is a bold step for an analyst that was suggesting that investors short Sirius XM in the past.

OK, so technically Ratcliffe wasn't telling investors to blindly bet against the company itself. He has suggested buying Liberty Media (Nasdaq: LMCA) as a way to cash in on Sirius XM at a discount and shorting the exposure equivalent of Sirius XM shares. In other words, it would be an arbitrage play based on the narrowing discount between the value of Liberty Media's effective 46.2% stake in Sirius XM and the actual market value of the stock.

However, now that the gap is narrowing and Sirius XM's own fundamentals continue to improve, Ratcliffe is singing a slightly different tune.

Ratcliffe isn't perfect. He discontinued coverage of Sirius XM three years ago at the worst possible time, just as the stock was bottoming out in early 2009.

The stock went from roughly $0.10 a share at the time to better than $2 when he reinitiated coverage with a bearish rating and a $2 price target earlier this year. We're talking about a 20-bagger in that time.

It's still better to be right late than not at all. His new price target on Sirius XM is $2.25.

Ratcliffe is still feeling better about Liberty Media than about Sirius XM, upgrading those shares, too, today. He sees Liberty Media eventually taking either de facto control or a majority stake in Sirius XM. Liberty Media would then use a Reverse Morris Trust to spin off the unit to its shareholders in a tax-free transaction.

Some may argue that a glut of Sirius XM shares on the open market would slam the stock, but Ratcliffe sees aggressive share repurchases on the satellite-radio provider's part if that happens.  

Sirius XM continues to grow up, and that's going to be a boost for the believers.

Running of the bulls
I remain bullish on Sirius XM's future. It should come as no surprise that I'm promoting the CAPScall initiative for accountability by reiterating my bullish call on Sirius XM for Motley Fool CAPS.

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