Friday, May 26, 2006

Some Pre-Market Analyst Comments...

May 26, 2006

As one would expect, the analysts have quite a bit to say about XMSR and SIRI. Here are excerpts from reports by Barrington, Cowen, Stifel, and Morgan Joseph:


05/26/2006 : JAGNote by Barrington Research Associates, Inc. Par(JAGNotes.com 05/26 07:01:53)
Source: JAGfn.com

XMSR: Downgraded - The firm noted they are cutting its rating on XMSR toMARKET PERFORM.-

The company announced today that it was revising its yearend subscribercount target to 8.5 millionfrom the former 9.0 million. While this still indicates that another 2 million net new subscribers will be added in the final three quarters of the year, the reduced target suggests the pace of subscriber addition in the balance of this year will lag that of the same period lastyear.

A slowed rate of growth can call into questions the aggregate targets we have maintained through the end of this decade. This is the latest in a string of bad news for XMSR and certainly the most serious, in our view. In recent months XM has been plagued with a director's resignation, challenges by both the FTC and FCC, sharply higher than expected SAC costs it has been attempting to curtail, a conflict with theRIAA over performance rights related to its new receiver hardware, and now this.

While the other issues were less significant on an individual basis, they collectively weighed down the stock. The subscriber count issue, however, goes beyond a nuisance factor and calls for a closer look on various assumptions. Reflecting this more serious news, we are cutting our opinion on XMSR toMARKET PERFORM from the previous OUTPERFORM.

SIRI: Outperform - The firm noted they continue its OUTPERFORM recommendation. While the stock has traded down and remained characteristically volatile, we continue our positive view on the common and view this stock as the current preferred choice for those interested in participating in this industry segment.


XMSR & SIRI: Sell-off overdone, weakness a buying opportunity@COWN -

Cowen(theflyonthewall.com 05/26 07:17:41) views the recent selling in XMSR & SIRI as overdone and views valuations as compelling based on 2008 metrics and expected visibility. The firm says shares of both companies are experiencing shareholder rotation as momentum investors exit but expects value sensitive investors to return.


XM Satellite-XMSR guidance could still be aggressive, target lowered-Buy@STFL(theflyonthewall.com 05/26 07:54:40) - Stifel, Nicolaus & Co. believes the reasons for XM's lower retail subs guidance could be due to a slowdown in marketing spending, rough YoY comps, Howard Stern and gas prices. They believe 2010 guidance of 20M subscribers looks to be too aggressive by 2M and has lowered their target to $20 from$25. The firm also believes the valuation gap to Sirius Satellite Radio(SIRI) should tighten because XMSR's enterprise value has been too "out of wack" in relation to SIRI. They feel either XM needs to come up or SIRI needs to go down.

Sirius Satellite-SIRI target lowered, long-term guidance could be at(theflyonthewall.com 05/26 07:29:03)risk-Buy@STFL - While Q2 looks to be "OK" for Sirius after management reiterated guidance this week, Stifel, Nicolaus & Co. believes long-term guidance could be at risk if the company faces slowing gross retail adds. The firm has lowered their target to $6 from $7.50 and will maintain Buy onthe belief that SIRI will get closer to its long-term guidance than the Street currently expects.

Morgan Joseph:

XM Satellite Radio Holdings "buy," target price reducedThursday, May 25, 2006 9:28:19 AM ETMorgan Joseph & CoNEW YORK, May 25 (newratings.com) - Analysts at Morgan Joseph maintain their "buy" rating on XM Satellite Radio Holdings Inc (XMSR.NAS), while reducing their estimates for the company. The target price has been reduced from $40 to $24.In a research note published this morning, the analysts mention that the company has reduced its subscriber growth for 2006 from nine million to 8.5 million, marginally short of the estimates. XM Satellite Radio Holdings’ performance is expected to improve in 2007 due to OEM ramp-up, the analysts say. Although the company has projected its subscriber revenue guidance for the year significantly short of the estimates, it has retained its cash flow guidance, Morgan Joseph adds. The EPS estimates for 2006 and 2007 have reduced from -$2.01 to -$2.16 and from -$0.76 to -$0.91, respectively.

5/26/2006 08:10:00 AM

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