Deutsche Bank lowers Sirius XM stock price target, citing weak growth forecasts

Deutsche Bank on Wednesday revised its price target on Sirius XM Radio (NASDAQ: ) stock to $3.75 from the previous $5.00, while maintaining a Hold rating on the stock. The change comes as the bank sets a more conservative valuation outlook for the satellite broadcaster, citing uncertainty over the satellite broadcaster's future growth.

Analysts at the bank pointed to lower earnings, tax, depreciation and amortization (EBITDA) and free cash flow (FCF) expectations as the main reasons for the price target reduction. The analyst emphasized that the new valuation reflects the challenges of forecasting a return to sustained positive growth in Sirius XM users and EBITDA.

Currently, Deutsche Bank does not expect Sirius XM's user base or its consolidated EBITDA to grow over the next six years. The forecast is based on a valuation perspective, which suggests that Sirius XM stock's unlevered free cash flow (UFCF) yield should be consistent with Deutsche Bank's estimate of the company's weighted average cost of capital (WACC) of about 8%.

Given the lack of visibility on key growth metrics, the lower price target signals a more cautious stance on the stock's potential performance. As Sirius XM responds to the challenge posed by Deutsche Bank, the company's stock performance and future financial performance will be closely watched by investors.

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