Sirius XM Radio Inc (NASDAQ:SIRI) Could See $5, Charts and Valuation
Sirius XM Radio Inc (NASDAQ:SIRI) is about to spend $2.3 billion in cash through dividends and buybacks, the number shows just how strong Siri has become. The shift will force the market to look at the company in a new and much more favorable light that could result in a stock price over $5.
The Board of Directors declared a special cash dividend in the amount of $0.05 per share of common stock, payable on December 28, 2012 to stockholders of record as of the close of business on December 18, 2012.
The company has been the subject of a multibillion dollar battle for control that is finally coming to an end, that combined with the current cash flow and cash reserves justifies a better valuation than 6 times earnings.
Also in the favor of Siri is the record number of new cars hitting the road, Siri should be trading closer to 12 times earnings at a minimum.
So we have a $2 billion common stock repurchase program, that should add 20% to the price, Liberty Media will also be buying, we can add another 5% for that, most of the stock will come from speculator/day trader types, that is another huge bonus for the shareholders, so at the end of the buyback period I estimate the price to be $5.
Sirius XM Radio Inc confirmed fiscal 2012 revenue, adjusted EBITDA guidance and expects revenue approaching $3.4 billion, Adjusted EBITDA of approximately $900 million for fiscal 2012.
I have uploaded some of the charts, you can double click on the images below to see them full sized
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