On Wednesday, Benchmark, a financial analysis firm, adjusted its price target for Sirius XM Radio (NASDAQ:SIRI), bringing it down to $32.00 from the previous $43.00. Despite the reduction, the firm maintains a Buy rating on the stock. The decision follows Sirius XM's release of its 2025 guidance earlier in the day, which included an expected decline in revenue.
The analyst at Benchmark cited the new guidance as the reason for the price target adjustment, noting that the anticipated revenue dip contributed to the change. However, the firm's positive outlook is underpinned by Sirius XM's projected ability to generate $1.5 billion in free cash flow by 2027.
This forecast is bolstered by an additional $200 million in annualized cost savings expected by the end of next year, which suggests a roughly 17% current free cash flow yield, though this figure is projected for three years in the future. InvestingPro analysis shows the company currently maintains a healthy free cash flow yield of 9% and has consistently paid dividends for 9 consecutive years, with a current yield of 4.28%.
Benchmark has updated its model to align with Sirius XM's revised figures, setting a revenue expectation of $8.5 billion for the next year, compared to the reiterated guidance of $8.675 billion for the current year. Furthermore, the firm anticipates an EBITDA (earnings before interest, taxes, depreciation, and amortization) of $2.6 billion, which is slightly lower than this year's ongoing expectation of $2.7 billion. In terms of free cash flow, Benchmark projects an increase to $1.15 billion from approximately $1.0 billion this year. Current EBITDA stands at $2.56 billion, as reported by InvestingPro, which offers comprehensive financial analysis and additional insights through its Pro Research Reports covering 1,400+ US stocks.
The revised targets from Benchmark contrast with their earlier 2025 estimates, which had optimistically predicted revenues of $9.0 billion, EBITDA of $2.8 billion, and free cash flow of $1.2 billion. The new guidance provided by Sirius XM has necessitated these adjustments as the company navigates its financial future.
In other recent news, Sirius XM Radio has been the subject of several analyst adjustments. Rosenblatt raised Sirius XM's target to $29 while maintaining a neutral stance. This followed Sirius XM's strategy shift to focus on acquiring car-based subscribers and the unveiling of its 2025 guidance, which anticipates a drop in revenue and EBITDA.
Similarly, Benchmark lowered Sirius XM's price target to $32, but retained a Buy rating, citing the company's plan to generate $1.5 billion in free cash flow by 2027. Goldman Sachs also cut Sirius XM's price target to $21 on a reduced earnings outlook, while BofA Securities maintained an underperform rating with a steady price target of $23. Guggenheim, however, maintained its Buy rating and steady price target of $30, aligning its model with the company's new 2025 financial projection.
Among other recent developments, Sirius XM announced the appointment of Wayne D. Thorsen as the new Executive Vice President and Chief Operating Officer. The company also presented its 2025 guidance, which forecasts a decrease in revenue and EBITDA but an expected rise in free cash flow.
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