Continuing from article: "Is Sirius XM Stock (SIRI) a Buy, Sell or Hold?"
3. Risks to Buying SIRI Stock
Unlike some of its rivals, SIRI seems to have attracted a relatively dedicated group of customers, as evidenced by its low monthly churn (subscriber defection) rate of around 1.9% (as compared to HBO's 4%). This bodes well for the time being, as it gives shareholders the confidence of SIRI's continued profitability. However, given newer and emerging broadcasting paradigms, management cannot be complacent and rest on its laurels. Unless SIRI continues to offer differentiated content, it could see subscription erosion.
Management execution is also extremely vital to continue to attract shareholder interest in the company. If there is a repeat of the Sirius XM strategy of losing money through investing billions in the satellite network launch, only to be bailed out through the Sirius and XM merger, the company may not survive.
While competitors like Spotify and Pandora have thus far limited their on-air offerings to streaming music, should they decide to broaden their menu, SIRI could face added competitive risks which could threaten churn rates and add margin pressures.
4. Sirius XM Technical Analysis (Is SIRI a Good Stock to Buy?)
At the time of this report, based on data available at Morningstar, SIRI has been trading at a 52-week range of $1.78 and $3.19.
The stock has been rallying since June 2012 and breaking resistance on the way up through its 200-day, 50-day and 30-day moving averages. Seeing that the stock continues to trade well above its 30-day SMA, it does seem like SRI is in for a higher run, at least in the short term (30 to 60 days).
However, that can change when SIRI delivers its Q4-2012 earnings report, expected sometime in February 2013. Purely on the technical signs, short-term Investors and traders would do well to consider taking some profits off the table as the stock continues its upward march.
5. Will the Music Stop?
For its listeners, SIRI certainly does a great job of delivering non-stop, commercial-free music and entertainment. But investors and shareholders will be looking for much more. With increasing competitive pressure on capital markets, ever expanding appetite for Mergers and Acquisitions, and the fast evolving phenomenon of "new media" – including "over the top" delivery channels like Hulu and Netflix, video streaming into mobile devices like iPhones, iPods and iPads, Video On Demand, and Digital Video Recording – the big question is whether SIRI will remain relevant and competitive in the longer-term.
As the company enters 2013, it will face an increasing "battle of the bundles", as key players within its space aggressively market their products and video, data and voice services as "packages", posing serious price pressure for SIRI, unless the company evolves, adapts and improvises as it has done in the past.
6. Bottom Line
Given the above analysis, SIRI would rate as a "Moderate Buy".
(By: Monty R. – MarketConsensus News Contributor)