Seaport Global Securities has updated its financial model for Sirius XM Radio (NASDAQ: NASDAQ:SIRI), resulting in a lowered price target.
The firm now aims for a $34.00 target, a decrease from the previous $37.00, while sustaining a Buy rating on the stock.
The adjustment comes after a review of Sirius XM's first half of 2024 free cash flow (FCF), which showed a $130 million shortfall. This reduction, however, was attributed to Liberty's corporate, interest, and deal expenses, rather than a fundamental decrease in Sirius XM's performance.
The firm also made slight modifications to its advertisement revenue projections based on the company's report of some canceled campaigns. Despite these changes, Seaport Global Securities anticipates a strong 25% FCF growth for Sirius XM by 2025.
Seaport Global Securities also increased its maintenance capital expenditure estimates for Sirius XM. Nevertheless, the firm maintains a positive outlook, emphasizing the potential for significant free cash flow growth moving forward.
In other recent news, Sirius XM Radio's quarterly earnings report revealed an 8% sequential increase in adjusted EBITDA and a 6% increase in free cash flow from the previous year, despite a decline in subscriber and advertising revenue. Sirius XM's acquisition of Liberty Sirius is seen as a positive move by JPMorgan, although the bank has resumed coverage with an Underweight rating and a price target of $20.00, citing concerns about the company's long-term growth prospects.
Benchmark, however, lowered its price target for Sirius XM to $43.00, maintaining a Buy rating, while Citi increased its target to $21.00, emphasizing the effects of the Liberty transaction and increased capital expenditures.
Morgan Stanley resumed coverage with an Underweight rating and a price target of $23.00, pointing out the company's declining revenue and adjusted EBITDA. Despite recent challenges, Pivotal Research maintained a Buy rating on Sirius XM, emphasizing the company's robust free cash flow capabilities and potential for growth.
InvestingPro Insights
Recent data from InvestingPro adds depth to Seaport Global Securities' analysis of Sirius XM Radio (NASDAQ:SIRI). Despite the lowered price target, several metrics support the firm's maintained Buy rating. SIRI's P/E Ratio (Adjusted) stands at 6.15, indicating the stock may be undervalued relative to its earnings. This aligns with an InvestingPro Tip suggesting that SIRI is "Trading at a low P/E ratio relative to near-term earnings growth."
The company's financial health appears robust, with a revenue of $8,899 million over the last twelve months as of Q2 2024. Additionally, SIRI boasts a strong EBITDA of $2,603 million for the same period, with an EBITDA growth of 0.15%. These figures support Seaport Global Securities' projection of significant free cash flow growth.
Another InvestingPro Tip highlights that SIRI "Has maintained dividend payments for 9 consecutive years," with a current dividend yield of 4.38%. This consistent dividend policy may attract income-focused investors, despite the recent stock price decline noted in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for SIRI, providing a broader perspective on the company's financial position and market performance.
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