Sirius: Merrill Ups Rating; Sees “Imminent” Merger OK

Merrill Lynch’s Glen Campbell this morning raised his rating on Sirius Satellite Radio to Buy from Hold, while slightly trimming his price target to $2.70 from $2.80. Campbell says he expect “imminent approval” from the FCC for its pending merger with XM Satellite Radio. Campbell says the upgrade reflects the recent decline in the stock and the upbeat post-merger guidance the company provided yesterday. The company sees $400 million in merger synergies, positive free cash flow before satellite cap ex and $300 million in EBITDA before stock compensation.

Campbell contends the current valuation discounts 30 million subscribers in 2017, which would be about 1 million new subs a year after 2009. He thinks that may be too low, noting that satellite radio should become more appealing and affordable post merger with tiered and a la carte pricing.

Despite the upgrade, SIRI today is unchanged at $1.92.

[Via Barron's]