Stop the bandwagon. An analyst wants to get off. Shares of Sirius (NASDAQ:SIRI) and XM (NASDAQ:XMSR) took a breather on Wednesday, after UBS analyst Lucas Binder downgraded both stocks from "buy" to "neutral."

It may seem brave to go against the herd. Sirius and XM have been inching ahead in recent weeks, fueled by the contagious optimism that their merger -- announced more than seven months ago -- has a pretty good chance of being approved. But if bulls believe the deal now has a 50% chance of going through, it follows that they also believe there's a 50% chance it won't.

I get that, but here's why I don't agree with Binder's downgrade.

Let's look at where shares of XM and Sirius closed on four specific dates.















Let's color in the four dates. The first column of prices shows where each provider closed out the 2006 trading year. The next column is where each stock closed before the merger was announced. Feb. 20 is the day the deal was announced. The last column is where XM and Sirius closed yesterday.

What's my point? Glad you asked. You'll notice that despite all of the recent market enthusiasm for the sector -- I mean, even overseas provider WorldSpace (NASDAQ:WRSP) has seen its shares climb 21% higher this year -- XM and Sirius are still trading lower in 2007. Sirius is even trading lower than just before the merger was announced, and both stocks are trading well off the initial post-merger announcement gains.

I don't mean to take anything away from Binder. He was sharp enough to upgrade both XM and Sirius in late April, just as the stocks were bottoming out. However, reversing that call this week finds him leaving a lot on the table.

Even if the merger falls apart, does anyone really believe that XM and Sirius are worth less than they were when the year began? Both companies have continued to add new subscribers. XM and Sirius have posted narrower per-share deficits in each of the past four quarters.

We've spent the past seven months weighing the merits of a potential merger, yet each company is making strides to go it alone if the regulators nix the nuptials. You don't sell into that kind of win-win scenario. That's pretty much the only way to lose in a win-win scenario.

Other things to read before the wedding invitation arrives:

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Longtime Fool contributor Rick Munarriz is such a big satellite radio fan that he subscribes to both XM and Sirius. He does not own shares in any of the companies in this story. He is a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.