Monday, January 4, 2010

Is Sirius XM A Takeover Target?

. Monday, January 4, 2010

By stockOzone team

Shares of Sirius XM (NASDAQ: SIRI)jumped over 7% on Monday, the first full trading day of the New Year, amid several bullish reports. Investors lapped up the shares of the satellite radio company amid speculations that it is being eyed by DirecTV.

Shares also rallied on reports that Bank of America has initiated coverage on Sirius XM Radio Inc. (NASDAQ: SIRI) with an Overweight rating. According to the research note, The favorable attributes of Sirius include 1) a subscription-based business that has permitted the company to weather the economic downturn 2) a sizeable subscriber base 3) a relatively small (less than 10%) penetration rate of the entire domestic automobile base 4) a credit trajectory at a favorable inflection point and 5) strategic asset value. Bank of America believes Sirius will comfortably exceed its initial 2009 EBITDA guidance of $300 million, it added.

It is also being rumored that Sirius XM is preparing to unveil new product at upcoming Consumer Electronic Show in Las Vegas starting Thursday, January 7.According to a source at Best Buy (NYSE:BBY), the company circulated an email last week stating that they will not be restocking Satellite Radio inventories in anticipation of new product releases and stating that Sirius XM Radio (NASDAQ: SIRI) will be “completely changing its product line.” Speculation is rife that the company will finally release SkyDock-like devices for Android and Blackberry phones. Few analysts believe that it will introduce new Wi-Fi enabled radios.

Disclosure: Author does not own any of the stocks discussed here.

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