Guggenheim maintained a neutral rating on Sirius XM (NASDAQ: SIRI) on Wednesday, but lowered the stock’s price target to $2.90 from $3.30. The revision reflects the company’s updated model, which takes into account the satellite radio company’s ongoing subscriber struggles and its forecast for a tougher advertising environment in the second quarter.
Guggenheim’s revised forecast for Sirius XM’s second-quarter revenue and adjusted EBITDA is now $2.179 billion and $665 million, down from previous projections of $2.203 billion and $684 million, respectively . The forecast change is primarily attributed to a conservative advertising forecast for the second quarter, especially due to the weakness seen in May.
The company also changed its estimates for second-quarter paid net additions, now forecasting a loss of 160,000 subscribers compared to the previously forecast loss of 35,000. This update is based on yearly trends that appear to be worsening.
For the full year, Guggenheim lowered its revenue and adjusted EBITDA forecasts for Sirius dollars. The price target adjustment to $2.90 reflects the updated financial expectations and challenges facing the company.
In other recent news, Sirius XM Holdings Inc. announced that Joseph A. Verbrugge, the company’s Chief Commercial Officer, will extend his tenure to ensure a smooth transition of his responsibilities. This decision, as reported in a recent SEC filing, underscores Sirius XM’s focus on a seamless leadership transition within its business operations.
As for financial developments, Sirius XM reported a mixed performance in its first quarter 2024 earnings, with a slight decline in subscription revenue but a 7% increase in advertising revenue, which topped $400 million. The company’s adjusted EBITDA also increased 4% from the prior year.
Analysts recently reviewed Sirius XM stock. Rosenblatt Securities changed its price target to $3.40 from $4.50, maintaining a Neutral rating. Deutsche Bank revised its price target to $3.75 from $5.00, maintaining a Hold rating. Goldman Sachs upgraded its position on Sirius XM from Sell to Neutral, but reduced its price target to $3.25 from $3.50.
In other company news, Sirius XM is among the North American companies that will begin cutting jobs in early 2024 as part of cost-saving measures. These recent developments provide a snapshot of Sirius XM’s current operating and financial landscape.
Insights from InvestingPro
In light of Guggenheim’s neutral stance and revised price target for Sirius XM, InvestingPro’s current metrics offer additional context for investors. Sirius . The company’s P/E ratio has declined slightly to 7.68 over the trailing twelve months as of Q1 2024.
Despite recent difficulties, Sirius XM has demonstrated a consistent ability to reward shareholders, maintaining dividend payments for 9 consecutive years with a current dividend yield of 4.0%. Furthermore, the company’s profitability is underscored by a gross profit margin of 48.94% for the last twelve months as of Q1 2024. However, investors should note that short-term obligations outweigh liquid assets, which could pose liquidity risks.
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