Sirius XM: Goldman Cuts Target to 25 Cents, Trims Revenue Estimates
Goldman Sachs analyst Mark Wienkes this morning repeated his Sell rating on Sirius XM (SIRI), while cutting his price target to 25 cents from 50 cents and trimming estimates. He contends that 2008 subscriber forecasts will be cut or missed.
“Our lowered estimates and price target reflect further erosion of satellite radio industry demand,” he writes. He says subscriber acquisition costs, average revenue per user and churn are all moving in the wrong direction, and notes that revenue has been unable to cover operating and capital expenses, leaving the company with negative free cash flow and dependent on the capital markets for ongoing funding. Wienkes contends that the company’s inability or unwillingness to have previously refinanced its capital structure “is now unlikely to preserve much, if any, equity value.”