Today, Sirius XM Radio (SIRI) was the most traded stock on the Nasdaq. Investors exchanged 84 million shares as the stock rose to end the day at $2.96. During the day it crossed above $3 a share, a long awaited milestone that millions of SIRI shareholders have waited for. The last time the stock was at $3 was in February 2008, on its way down to 6 cents.

Sirius XM Radio Inc. provides satellite radio services in the United States and Canada. It operates over 130 channels, including music, news, sports and entertainment. Users pay a subscription fee on a monthly basis. 

Investors bid up the stock price today due to a Buy rating initiated by Goldman Sachs analysts. Goldman placed a 12-month $3.50 price target on the stock.

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Sirius XM Radio has a Market Cap of $15.41 billion and a forward P/E of 29.60. It also has over $500 million in cash. Although the stock has risen by 59% year to date, Goldman sees “incremental upside to the stock via greater than expected growth in free cash flow (FCF) and FCF/share estimates. We expect SIRI to utilize FCF and an under-levered balance sheet (in accommodative fixed income markets) to aggressively repurchase shares, shrinking share count by 20% through 2015E and 45% over the next ten years."


Sirius does have some upside potential going into 2013. Their revenue is growing by 13.74%, compared to their peers who on average are experiencing a 4.37% revenue growth. In addition, the firm is doing a great job building its financial strength. It has a total debt/total capital ratio of 36.94. This ratio is a measurement of a company’s financial leverage. The lesser this ratio is, the better. Sirius’s peers have on average a total debt/capital ratio of 56%. 

SIRI is considered “one of the most profitable companies in the Broadcasting & Cable TV industry with a net margin of 102.87%. Its net margin and gross margin are among the strongest of any peer while its operating margin is above the median”.