Sirius XM soars after Q1 earnings


While CEO Mel Karmazin may have been reluctant to raise expectations for 2011 because of the uncertainty over Japanese auto parts production, Wall Street pushed the price of Sirius XM stock up. The satellite radio company had reported record results for Q1.

The stock rose 16 cents on Tuesday to move past the $2.00 mark and close at $2.07. Exactly a year earlier you could have bought the stock for $1.23. The advance continued on Wednesday and the stock closed at $2.13.

With his $2.00 target price being left in the dust, Standard & Poor’s equity analyst Tuna Omobi raised his target price for Sirius XM to $2.50. He was impressed by the 373,000 in net subscriber additions for Q1, which exceeded Wall Street expectations. He also noted Karmazin’s hints – more than hints really – of a coming price hike once the three-year freeze imposed by the FCC to win its merger consent expires in Q3.

The analyst views the guidance from Sirius XM as “somewhat conservative,” given the Q1 results. Karmazin admitted as much, but insisted on being cautious until the supply chain implications of the Japanese earthquake and tsunami are known. As reported, Karmazin said no OEM supply problems had been observed through April.

RBR-TVBR observation: Sirius XM is certainly a cash flow machine now that it has the satellite radio market all to itself. Don’t you wish you’d bought Sirius stock for 12 cents back in December 2008?