Wall Street Warms Again to Sirius XM

| About: Sirius XM (SIRI)
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By Brandon Matthews

Hollywood could not have written a better script. As the number of days leading up to Sirius XM Radio’s (NASDAQ: SIRI) date with the Nasdaq Hearings Panel dwindled, the stock surged and has remained well over the one dollar minimum bid threshold for six straight days. If Sirius XM stock can maintain its current level through Tuesday of next week, the company will have regained compliance on the eve of its hearing, which will be canceled.

With only four trading days remaining, Sirius XM’s standing is nearly assured. By now, Sirius XM has broken or is on the cusp of breaking its all time subscriber record of 19,003,856, that it had reported as of December 2008. As of the first quarter of this year, Sirius XM had reported 18,944,199, which is less than 60,000 short of a new record. The company had added more than 171,000 from January to March, and 257,000 in the previous quarter.

From a technical perspective, Sirius XM shares are consolidating in the $1.09 to $1.15 range, and buying ahead of earnings appears to be brisk. It seems Wall Street is again warming up to the company, as analysts appear to be singing a more positive and upbeat tone when discussing the company’s EBITDA and Free Cash Flow growth potential.

On the auto front, new car sales appear to hitting new highs, as zero percent financing incentives are having a significant impact on sales. As Edmunds.com has reported, the number of zero percent deals is a clear sign that the credit markets have seen a faster thawing for new car purchases. April promises to be an extraordinary month for all of the automakers, and Sirius XM is the ultimate play on a rebound in the sector.

The reported SAAR rate as of March was already well ahead of Sirius XM’s guidance and Wall Street expectations. April auto data will be released by early next week, adding strength to Sirius XM shares and into the company’s earnings release. All of this has the potential to combine with the announcement that Sirius XM has regained compliance and catapult Sirius XM shares well above its current levels in the not too distant future.

Disclosure: Long SIRI