Zacks Investment Research upgraded shares of SIRIUS XM Radio Inc. (SIRI) from UNDERPERFORM to NEUTRAL on April 18, 2013, with a target price of $3.25.
We upgrade our recommendation on SIRIUS XM Radio to Neutral ahead of its first-quarter 2013 financial results. We expect positive momentums with respect to revenue, margins and free cash flow to continue in the near-term. SIRIUS XM is largely dependent on the growth of the U.S. auto industry and currently holds an estimated 70% market share of the new cars sold in the face of growing competition from Pandora Media and Spotify. Therefore, even a minor fluctuation of auto sales may significantly affect the company's overall financials. Continuous rise in auto sales led to a record subscriber growth for the company in 2012. Management has hinted that auto sales may rise at a slower rate in 2013. In order to retain its subscriber base, SIRIUS XM recently introduced an innovative personalized interactive Internet radio service called "MySXM". Additionally, the company is expected to maintain its churn rate going forward.
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