Citigroup analyst Tony Wible is reiterating his Buy rating on Sirius (SIRI), citing expected merger synergies. Wible characterised Citi’s preannounced results for Q2 as “solid.”:
Revenues of $283 mil (+25.0%) were ahead of our $277 mil (+22.3%) estimate, while the adjusted loss from operations of ($24) mil was better than our ($30) mil estimate. The better revenue numbers combined with in-line subs suggest ARPU was better than expected. We will wait until the official deal close and full 2Q08 results are posted to update our forecast.
Wible is also satisfied with SIRI’s subscriber numbers. Sirius had 8.92 million subscribers by the end of the quarter, up 25% year-over-year. Lower OEM subscription growth was offset by higher than expected retail growth. Wible reiterates his $6.50 price target and thinks that now that the merger is officially approved, SIRI and XM will be able to capitalise on valuable synergies:
Following the official approval of the merger by the FCC on Friday night, we see significant value to the combined company from the merger synergies that, given both SIRI’s and XM’s solid 2Q08 results, look like they will not be eroded by a weak operating environment.
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