Sirius XM Holdings Inc. (NASDAQ:SIRI) has pulled back from its new 52-week high of $4.65 a share, amidst talk it could rally even further given the current wave of bullishness. Fueling investor interest in the stock is the fact that the company is slowly becoming a blue chip company as it continues to operate a monopoly in the satellite radio business.
Sirius XM Solid Growth Prospects
Analysts at Barrington Research believe the satellite radio firm could enjoy solid growth going forward given its performance in the recent past. The firm currently has an ‘outperform’ rating on the stock. However, the analysts have warned that the company’s growth prospects could be restricted by the fact that its service offerings will remain car-centric.
“Significantly expanding seasonally adjusted annualized rate levels have pushed subscriber levels to new records, and rising used-car additions are poised to offset some of the inevitable weakening in new-car additions that are likely to develop at some stage,” Barrington Research in a research note.
High levels of new car sales supplemented by high penetration levels in these cars is expected to continue fuelling Sirius XM’s core business. Coming up with new programming channels for all sorts of musical genres is the company’s main play, as it looks to hold on to its unique position in the industry and fend off the threat posed by internet services.
Return on Investment
Sirius XM has curved a substantial amount of market share for itself in the satellite business having already attracted 31 million subscribers. While price increases have come into play in the recent past, Sirius XM is yet to experience any uptick in Churn as more subscribers continue to sign up.
The media giant has recorded 28 consecutive quarters of profitably a feat that is unique in its own right. Over the last few years, it has returned nearly $7 billion to shareholders through stock repurchases all but affirming its ability to generate shareholder value.
Sirius XM Holdings Inc. (NASDAQ:SIRI) strong financial base means it will continue dominating the satellite radio business for some time. In the recent past, it has suggested that it could be an acquirer all but affirming a bright future.