Shares of Sirius XM (NASDAQ:SIRI) surged 15% to close at $4.68 on September 28 on account of a short squeeze and the buzzing news of the potential Liberty Media (NASDAQ:LSXMA) acquisition. On September 27, Liberty Media put forth a non-binding acquisition bid for the American radio service provider SIRI. LSXMA has proposed spinning off its tracking shares and combining them with the listed shares to form a new public company.
SIRI stock has a relatively smaller float as LSXMA owns more than 80% of the company. Yesterday’s short interest shows that roughly 27% of SIRI stock was sold short. The Options tool of Sirius XM also shows a significantly rising Open Interest (OI) on the stock post the Liberty Media announcement. All these factors are contributing to SIRI’s surging stock price.
What Analysts Say About SIRI’s Acquisition
Following the takeover news, Bank of America Securities analyst Jessica Reif Cohen cut the price target on SIRI to $4.50 (3.9% downside) from $5.50. He reiterated a Hold rating on SIRI stock.
Cohen believes that the acquisition and elimination of the tracking structure of the current Sirius XM will increase the liquidity of the company’s shares. This is favorable as it increases the chances of the stock becoming a part of the S&P 500 (SPX) index.
Similarly, research firm Morgan Stanley believes the change in the ownership structure will be advantageous for SIRI. The firm has a Sell rating on SIRI stock and a price target of $4 (14.5% downside).
Is SIRI a Buy or Sell?
Overall, Wall Street has a Hold consensus rating on Sirius XM shares. This is based on two Buys, six Holds, and three Sell ratings on TipRanks. Also, the average Sirius XM price forecast of $4.99 implies 6.6% upside potential from current levels. Year-to-date, SIRI stock has lost 17.9%.
