For those stuck in traffic or on a long drive, satellite radio company Sirius XM (NASDAQ:SIRI) can be a lifesaver. The stock, meanwhile, should have picked up a lifesaver of its own thanks to a new upgrade from Pivotal Research. However, it didn’t much help, and Sirius stock was down fractionally in the final minutes of Wednesday’s trading session.
Pivotal Research analyst Jeffrey Wlodarczak offered up a research note detailing why his rating went to Buy. Earlier reports from back in December noted that Liberty Media—which owns over 80% of Sirius—would merge its tracking stock, trading under the symbol LSXMA on the Nasdaq, with Sirius XM equity shares. Tracking stocks are special shares issued by a parent company to track the performance of a specific division within the company.
That, in turn, sent the net asset value gap from its previous 40% to around 2%. That, combined with a decline in Sirius’ overall valuation, was sufficient to open up the chance of a “material” acceleration in free cash flow starting in 2025 and going on from there. Plus, there’s a good chance that Sirius will hike its prices that year, too, which should help improve revenue if too many subscribers aren’t lost.
It’s worth noting that, so far, Wlodarczak has enjoyed a 79% success rate on SIRI stock, with an average return of 12.09% per rating.
Drawing More Interest
This comes at a bit of a tough time for Sirius, though; American Express (NYSE:AXP) recently cut back on its reimbursements for SiriusXM. Previously, American Express customers got access to a $20 “digital entertainment credit” per month that largely comped customers for using it. But now, those who want in on the best plan for just $3.99 per month have a new option, according to View From the Wing.
Sirius, the report noted, offers “introductory discounts” that often extend as long as a whole year. Those who threaten to cancel their service when the discounts run out are rewarded with an extension of the introductory discount that lasts for another year.
Is Sirius Stock a Buy?
Turning to Wall Street, analysts have a Hold consensus rating on SIRI stock based on two Buys, three Holds, and four Sells assigned in the past three months, as indicated by the graphic below. After a 12.6% loss in its share price over the past year, the average SIRI price target of $4.74 per share implies 50.24% upside potential.
