Sirius XM: Guidance Cut Possible, Buy The Dip (NASDAQ:SIRI)

Ham Radio

George Carmichael/iStock via Getty Images

Auto supply chain challenges remain firmly in place. Recent comments (and actions) by carmakers such as General Motors (GM) and Tesla (TSLA) no doubt prove that it is still hard to produce cars at a reasonable price in a timely fashion. Just take a look at your local auto dealership lots – they are probably quite sparse these days.

Sirius XM Holdings Inc. (NASDAQ:SIRI) feels the inventory pinch, too. Analysts at Bank of America Global Research see a real chance that the firm might slash its 2022 self-pay net add subscriber guidance. At a recent conference, SIRI’s management team even said that it has become difficult to hit their guidance targets compared to when they issued them back in January. As recent economic data show, such as the official GDP print for Q1 and the Atlanta Fed’s Q2 GDPNow cast, times have not gotten any easier.

For background, SIRI is a satellite radio operator serving the U.S. market with more than 140 channels of music and talk programming. The company provides services for a monthly fee and currently has over 34 million subscribers. The company also owns Pandora, an audio streaming business with roughly 60 million active users, according to BofA.

Turning to the company’s numbers, its EV/EBITDA multiple has been trending downward for the last decade but is still at lofty nominal levels. SIRI’s high valuation might be warranted given its strong margins and shareholder accretive activities. Its consumer base is low churn, too.

SIRI EV/EBITDA Multiple Turning Less Expensive As Shares Trade Sideways

SIRI EV/EBITDA Multiple Turning Less Expensive As Shares Trade Sideways

Koyfin

BofA sees EPS stalling this year amid the broad economic slowdown and ongoing chip shortage issues in the industry, but then re-accelerating next year and in 2024. SIRI pays a 1.4% dividend yield right now, according to The Wall Street Journal. That yield should generally be steady over the next two years, per BofA. What’s encouraging is that the company’s free cash flow yield should increase steadily if the share price remains the same.

SIRI Earnings, Valuation, Dividend Forecasts

SIRI Earnings, Valuation, Dividend Forecasts

BofA Global Research

Looking ahead, SIRI has a confirmed earnings date of Thursday, July 28, BMO with a conference call to follow, according to data provider Wall Street Horizon.

Corporate Event Calendar: Earnings Later This Month

Corporate Event Calendar: Earnings Later This Month

Wall Street Horizon

The Technical Take

While the fundamentals should be on the mend for SIRI despite the threat of a guidance cut soon, the chart is not pretty for trend-loving technicians. The stock is unchanged from four-and-a-half years ago. I see resistance in the $7.50 to $8 range while $4.20 is support. Perhaps Elon Mush will scoop up shares at that support point (tongue in cheek).

SIRI: Support at $4.20, Resistance North of $7.50

SIRI: Support at $4.20, Resistance North of $7.50

StockCharts

The Bottom Line

Don’t turn up the volume on SIRI quite yet. I think we could get a flush in the shares if management indeed cuts its bal-year guidance estimates. If that’s the case, going long on the dip could make sense, but profits should be taken on a move toward $7.50.

Be the first to comment

Leave a Reply

Your email address will not be published.


*