Sirius XM’s (NASDAQ:SIRI) stock gained close to 15% over the past week, primarily due to the anticipation and launch of Sirius XM’s ugraded 2.0 version. The company has launched SiriusXM Edge, which is only a part of Sirius XM 2.0 upgrade and supports more channels including new Spanish ones. With the full upgrade, the company will be able to offer 25% more bandwidth. We stay positive on the stock with our $2.18 price estimate and expect that it will move up in next quarter or two. The primary risks continue to be weak economy that can affect car sales and competition from other radio service providers like Pandora (NYSE:P). In addition to Pandora, the competition could also rise from other music services that have potential to snatch away listener hours. These include Spotify, Apple’s (NASDAQ:AAPL) iTunes etc.
Sirius XM has a good service at an affordable price and a good business model. The company is not only investing in upgrading its service and technology, but also working on expanding vehicle partnerships. In the last few weeks, it has struck deals with Nissan and Infinity dealers as well as with Subaru.
See our recent notes Sirius Extends Partnerships with Nissan and Infinity, Reiterate $2.18 and How Sirius’ 2.0 Service Can Help its Retail Biz.
Our price estimate for Sirius XM stands at $2.18, implying a premium of more than 20% to the market price.
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