ANALYST NOTE SENDS SIRIUS, XM SHARES PLUMMETING Jeffrey Yorke – Radio and Records Shares of Sirius and XM fell hard in a daylong Thursday (June 19) sell-off after a Wall Street analyst recommended investors sell their positions in the satellite broadcasters. Both companies ended the day within cents of their 52-week lows.
Goldman Sachs analyst Mark Wienkes told clients, "The companies face falling demand among younger consumers, continued weak retail sales and cuts in production of new automobiles. Any imminent merger-related strength has passed."
The analyst said there was "long-term risk to the outlook" and questioned whether a combined entity would really benefit from a la carte pricing and increase the number of subscribers enough to cover the lower pricing.
While predicting that the companies would have higher 2009 costs, he also reduced his six-month price target on Sirius from $2.25 to $1.75 and on XM from $11.50 to $6.50.
The result was a huge black eye for both companies. Some 29.5 million shares of XMSR were traded, compared to the 30-day average of 4.37 million traded, and the price fell more than 17%, or $1.77, to $8.61 a share. That's just 66 cents away from the stock's 52-week low of $7.95 and a long way from the 52-week high of $16.44 a share.
SIRI shares were trading like hotcakes -- some 92.32 million were traded, far above the 30-day average of 24.83 million, and they ended the day 12.35% below Wednesday's close after losing 30 cents a share to close at $2.13. Sirius closed just 16 cents higher than its 52-week low of $1.97 a share and far from its 52-week high of $3.94. |