Today Citi listed XM Satellite Radio with a Hold (from Buy). Price target lowered from $17 to $12.25. Citi rates Sirius with a Buy. Price target $9.

Citi analyst says, “Satellite radio should continue to change the audio
entertainment industry and gain share as its proves to be fresh (no
need to create play lists or buy MP3s), original, cost effective, and a
simple way to access premium/long tail content that can not be
supported via radio or MP3 models. Given the highly fixed cost base of
the companies, we view the sub growth as the key driver of the stocks
and we see the industry having up to 55 million subsripts by 2011
(+33.3% CAGR)…70% Merger Probability - We believe that the proposed
merger between SIRI and XMSR will drive significant costs savings (we
forecast ~$500 mil by 2010 or 13% of the expense base) and potential
revenue synergies of another $400 million.”

I’m not going to comment on this story because we have heard things like this in the past and right now it is just another rumor for this ever evolving merger.

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