XM Satellite Radio initiated with "buy"

03/16/04 - Independent Research

NEW YORK, March 16 (New Ratings) — Analyst David B Kestenbaum of Independent Research Group initiates coverage of XM Satellite Radio (XMSR) with a "buy" rating. The target price is set to $29.

Shares of XM Satellite Radio, a leading US-based radio broadcasting company primarily focused on the car radio market, are currently trading at $25.47.

According to Independent Research Group’s research note published this morning, XM Satellite Radio is poised for continued subscriber growth over the next couple of years. The analyst mentions that the company is significantly leveraged to the robust sales growth potential of new cars and car radios in the US over the next few years. Independent Research Group anticipates additional subscriber growth opportunities ahead for XM Satellite Radio through its Boombox product, which provides its radio service reception even outside the vehicles.

The analyst expects XM Satellite Radio’s continued satellite radio business subscriber growth momentum to significantly boost its long-term operational cash flow and pretax margins growth potential. The current valuation of the company’s stock is attractive, Independent Research Group believes.

The EPS estimates for 2004, 2005 and 2006 are -$3.06, -$2.18 and -$1.38, respectively.

Independent Research Group initiates coverage of XM Satellite Radio with a "buy" rating.