Sirius XM Holdings (NASDAQ:SIRI) has had a rollercoaster trading session today after completing its merger with Liberty Media’s Sirius XM tracking stock. The shares dropped as much as 8.5% in the morning but swiftly bounced back, climbing 12% to land in the green.
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The newly merged company will continue to operate under the Sirius XM brand, with trading commencing after a long-anticipated reverse stock split.
As part of the announcement, Sirius XM highlighted its “simplified capital structure” and provided a financial update. The company reiterated its full-year 2024 revenue and adjusted EBITDA outlook while projecting approximately $1 billion in free cash flow for the year. This update follows an earlier forecast from late April, when the company anticipated generating $1.2 billion in FCF after its Q1 earnings report.
Among the optimistic voices is Seaport analyst David Joyce, who remains confident that the company’s trajectory is set for growth.
“We see ’24E FCF as the nadir for the company, with significant growth resuming in 2025 as satellite cap ex and tech replatforming spending moderates, and new advertising and streaming initiatives gain traction,” Joyce opined.
In fact, from hereon in, Joyce thinks the New Sirius structure should “significantly enhance trading liquidity and simplify the story,” and that could widen the shareholder base and potentially “improve sentiment and valuation.”
Joyce is a fan of the “stable business model,” which includes loyal satellite radio subscribers, a podcasting and advertising segment on the up, and a “manageable/modest decline” in the Pandora business. The company is focusing on expanding its streaming service to attract a younger audience, with investments in content creators like Alex Cooper to drive growth. Additionally, efforts to unify Sirius and Pandora onto a single platform should enable “bundling and cross-platform advertising deals.”
So, what should investors do now? Buy shares of the new SIRI entity, says Joyce, whose $37 price target implies the stock will climb 42% higher in the months ahead. (To watch Joyce’s track record, click here)
Overall, SIRI stock has a Moderate Buy consensus rating from the Street’s analysts, based on 11 reviews with a breakdown of 4 Buys, 6 Holds, and 1 Sell. (See SIRI stock analysis)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
