SIRIUS SATELLITE RADIO UPGRADED TO BUY AT MERRILL LYNCH
Sirius Satellite shares rise; upgraded to buy at Merrill Lynch
Tuesday , July 01, 2008 09:42ET
BOSTON, Jul 01, 2008 (Thomson Financial via COMTEX) -- Shares of Sirius Satellite Radio Inc. rose Tuesday after the New York-based company was upgraded to buy from neutral at Merrill Lynch, which cited the bullish management guidance for 2009.
The stock rose 2.6% to $1.92 on volume of 480,439 shares in early trading Tuesday. The issue's 30-day average volume is about 31.6 million shares.
On Monday, Sirius management announced preliminary 2009 post-merger guidance, including $400 million in merger synergies, positive free cash flow and $300 million in earnings before interest, taxes, depreciation and amortization.
Analyst Glen Campbell said his own view on synergies is very bullish, although his estimates are well below management's estimates. Campbell projects synergies will grow to $451 million by 2010 and more than $1 billion by 2017.
Campbell added that Sirius' valuation gives an "increased margin of safety." His year-end 2008 and year-end 2009 post-merger valuation of $3.21 and $3.42 a share, respectively, assumes 40 million subscribers in 2017, up from 17 million at year-end 2007.
Merrill Lynch set its price target at $2.70. Casey Logan cl/vj
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