Sirius XM to Acquire Stitcher Podcasting Unit for Nearly $300 Million
Sirius XM Holdings Inc, an American broadcasting company headquartered in New York City, is close to a deal to acquire E.W. Scripps’ Stitcher Inc. podcasting unit for nearly $300 million, the Wall Street Journal reported, citing people familiar with the matter.
The satellite radio operator is currently planning to expand into the fast-growing podcasting industry. In 2019, Sirius XM hinted to expand its business with a deal in which Walt Disney Company’s Marvel Entertainment is creating exclusive podcasts for the company’s satellite radio and streaming services, the WSJ reported.
According to the Interactive Advertising Bureau, the United States advertising revenue from podcasts climbed over 40% to $678.7 million in 2019 and it is forecast to rise to $863.4 million in 2020 and cross $1 billion next year.
After this news, Sirius XM’s share closed 0.51% higher at $5.87 on Monday, albeit putting it down around 20% since the start the year.
Sirius XM price target
Nine analysts forecast the average price in 12 months at $6.51 with a high of $7.50 and a low of $4.50. The average price target represents a 10.90% increase from the last price of $5.87, according to Tipranks. From those nine, five analysts rated ‘Buy’, three analysts rated ‘Hold’ and one rated ‘Sell’.
Morgan Stanley target price is $6.75 with a high of $8 under a bull scenario and $4.5 under the worst-case scenario. In April, Liberty Sirius XM Group Series has been assigned a consensus broker rating score of 1.25 (Strong Buy) from the two analysts that provide coverage for the stock, Zacks Investment Research reports.
One analyst has rated the stock with a buy recommendation and one has given a strong buy recommendation to the company. Wells Fargo lowered the price target to $7 from $9, RBC cuts target price to $6 from $7 and Evercore ISI cuts price target to $6.5 from $8.
“We believe SiriusXM has executed well in the franchise channel of the used car market, and rising penetration has helped slow trial start growth deceleration and given us more conviction in net adds. However, we see limited upside to our subscriber forecast given the difficulty of executing in the remaining used channels,” Benjamin Swinburne, equity analyst at Morgan Stanley noted in June.
“While we expect declining auto sales and an expected recession to weigh on results, we expect resilience in Sirius’ fundamentals and sub base to support EBITDA growth over the 2020-22 time frame. We see modest upside today, but believe OW Liberty Sirius (LSXMK) presents a more attractive opportunity, given its 70%+ stake in SiriusXM is valued at a 35-40% discount,” the analyst added.