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Sirius XM (SIRI): 5 Reasons to be Bullish

|Includes: Sirius XM Holdings Inc. (SIRI)

1. There has been a strong increase in satellite radio subscriptions. As of December 2009 there were over 19 million subscribers. In relation to there being fewer than 2 million subscribers in 2003 this illustrates a substantial and sustained increase.

2. Sirius has benefited from sound cost savings due to the merger with XM. It has been able to reduce expenses in areas such as back-office operations, marketing, and eliminated the potential for a bidding war on top content and or talent such as Howard Stern.

3. Subscriber growth is expected to continue improving over the coming years as the economy improves with consumer discretionary spending.

4. Sirius moving forward will have a more viable cost structure when compared to the pre-merger set up. A prime example is the expectation that the cost of programming will drop once contracts are renegotiated in the future. This is due to the fact that the rivalry between Sirius and XM no longer exists.

5. Looking forward profitability trends for Sirius are forecasted to continue upward. For 2009 Sirius XM’s EBITDA margin was 13%. Not too shabby. Some analysts are forecasting an EBITDA margin of 21% by 2015.

Summary:

We have no official buy or sell position on Sirius XM (NASDAQ:SIRI) but heavily encourage a positive discussion to see all points of view be they bullish, bearish, and or something else.

Want to hear the bears-side of the story? Check:

Bears Corner

Disclosure: no positions