On Wednesday, Sirius XM Radio (NASDAQ:SIRI) experienced a revision of its stock outlook by Benchmark, which lowered the price target to $32.00 from the previous $43.00, while still maintaining a Buy rating on the stock.
The stock has faced significant pressure, down over 52% year-to-date, though InvestingPro analysis suggests the company is currently undervalued based on its Fair Value model. The adjustment comes in response to the company's release of its 2025 guidance, which anticipates a decrease in revenue.
Despite this, the analyst upholds the Buy rating, citing SiriusXM's credible plan to generate $1.5 billion in free cash flow by 2027, bolstered by an additional $200 million in annualized cost savings expected by the end of next year.
According to InvestingPro data, the company has maintained dividend payments for 9 consecutive years, with a current yield of 4.28%, demonstrating commitment to shareholder returns despite market challenges.
The new price target reflects a recalibration of Benchmark's model to align with SiriusXM's latest guidance. It now includes a projection of $8.5 billion in revenue for the upcoming year, down from the company's reiterated expectation of $8.675 billion for the current year.
The model also shows an adjusted EBITDA forecast of $2.6 billion, compared to the steady $2.7 billion anticipated for this year, and an increase in free cash flow to $1.15 billion from approximately $1.0 billion.
Previously, Benchmark's 2025 estimates for SiriusXM were more optimistic, with $9.0 billion in revenue, $2.8 billion in EBITDA, and $1.2 billion in free cash flow. However, the company has already realized roughly $350 million in cost savings for 2023 and 2025.
For deeper insights into SIRI's financial health and future prospects, InvestingPro subscribers can access comprehensive analysis including 6+ additional ProTips and detailed financial metrics in our Pro Research Report.
In addition to the financial updates, SiriusXM announced the immediate appointment of Wayne D. Thorsen as its new Executive Vice President and Chief Operating Officer. Thorsen, who has a reputable background with companies like ADT Inc. and Google (NASDAQ:GOOGL), will be responsible for product and technology functions, commercial activities, and corporate strategies, following the immediate resignation of Joe Inzerillo, the former EVP and Chief Product and Technology Officer.
SiriusXM's CEO, Jennifer Witz, is set to present further details this afternoon at a UBS investor conference in New York. The company's next earnings report is scheduled for January 31, 2025.
In other recent news, Sirius XM Radio has seen a flurry of activity from major financial firms. Goldman Sachs lowered its price target for Sirius from $23 to $21, maintaining a neutral rating.
The adjustment followed Sirius XM's recent financial guidance for fiscal years 2024, 2025, and 2027, which fell short of market expectations. The company also announced a strategic shift, reallocating resources to its primary in-car subscription service.
Meanwhile, BofA Securities held its underperform rating on Sirius XM, citing concerns over declining revenues and the company's current phase of heightened investment. However, Guggenheim reiterated its Buy rating on Sirius XM, aligning its model with the company's new 2025 financial projection.
These are recent developments for Sirius XM, which anticipates revenues of $8.5 billion and adjusted EBITDA of $2.6 billion in 2025. The company also aims to reduce its debt by approximately $700 million by 2025 and implement cost-saving measures targeting an incremental $200 million in annualized savings by the end of 2025.
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