More hopeful chatter about XM (XMSR) and Sirius (SIRI) finally getting the go-ahead for their merger this week, but Goldman analyst Mark Wienkes doesn’t care: He downgraded XM from Neutral to Sell this morning, arguing that even if the stocks get a short-term run up, post-approval, they’re screwed in the long run.
“Deal or no deal, we think the current valuation incorporates a view too close to optimal, e.g. DOJ and FCC approvals with few conditions and subsequently, near-certain realisation of all potential synergies,” he writes in a note this morning, and reiterates his $11.50 price target on XMSR, which is down 6% in pre-market trading this morning.
So what about Sirius? Imagine XM, but worse, says Winkes: “In our view, SIRI (Sell) shares are subject to the same merger issues as XMSR shares coupled with a less favourable business model and trends.”
FYI, Sirius presents at UBS’ Media conference today; XM is on tap for tomorrow. We’ll cover both events live.
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