XM Satellite Radio's earnings forecasts are all over the map
Posted Feb 8th 2007 4:16PM by Trey Thoelcke
Filed under: Earnings reports, Analyst upgrades and downgrades, Forecasts, Rumors, XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI)
The release date of XM Satellite Radio Inc.'s (NASDAQ:XMSR) Q4 2006 earnings report is thus far unannounced, but could come as early as next week. The uncertainty about that date seems to reflect a larger uncertainty about XM and its only real rival, Sirius Satellite Radio Inc. (NASDAQ:SIRI).
Share prices of both satellite radio broadcasters rose for a time in January as rumors swirled that XM and Sirius might merge, even though it would require changes to FCC rules to make the merger possible. Analysts' reactions to the possible merger were mixed, depending on whether they thought the merger was likely to pass muster, when it might happen, and what such a merger might do the value of the resulting stock:
* Barton Crockett of JP Morgan recently upgraded XMSR on the strength of subscriber acquisition and the growing number of new automobiles with satellite radio built-in.
* Jonathan Jacoby of Banc of America Securities downgraded XM on doubts a merger could be completed.
* Bear Stearns cut its forecast for subscriber growth.
* Chad Bartley of Pacific Crest cut its rating due to a lack of faith in the merger.
* Citigroup (NYSE:C) analyst Eileen Furukawa maintained a buy rating but increased the target price.
* UBS analyst Lucas Binder lowered the target price on anticipation of slow growth this year.
According to Thomson Financial, the consensus rating is buy, though that's with 12 holds, 9 buys, and 8 strong buys -- there are no sell ratings. Analysts expect Q4 2006 revenue to be $243.26 million, with consensus earnings per share of -71 cents (the high forecast is -58; the low, -86). This is compared to -32 cents a year ago. While the mean price target is $19.94, they range from $11 to $32.50. The 52-week high was $27.01; the stock closed Wednesday at $13.86.
It didn't help XM to miss its 2006 year-end guidance on subscriber growth, bringing in 7.6 million rather than the predicted 7.7 to 7.9 million. And it also doesn't help that XM faces legal challenges from the big recording companies.
On the other hand, XM has extended its arrangements with Toyota (NYSE:TM) and Honda (NYSE:HMC) to factory install satellite radios in their new cars. And XM radio is also included with Microsoft's (NASDAQ:MSFT) new Vista operating system.
Analyst's opinions may be all over the place about whether XM, alone or merged with Sirius, can scratch its way into the black. But what do you think? Let us know what you're expecting, either in the reader poll or by leaving a comment. |
