Bear Stearns Ups XM Satellite to 'Peer Perform'
Bear Stearns upgraded XM Satellite (XMSR ) to peer perform from underperform.
On Wednesday the company closed a deal to get $475 million in funding from General Motors. Analyst Robert Peck says the latest round of financing is critical to XM in that it not only plugged the company's funding gap, but also confirmed strong support from GM. He notes the company has also made progress on its original equipment manufacturing radio distribution platform through relationships with GM, Honda, and Toyota.
Peck says funding and support from original equipment manufacturers will lower fixed costs and marketing expenses, and gives XM stronger confidence in its subscriber forecast. Peck now thinks the company could reach positive earnings before interest, taxes, depreciation and amortization, and free-cash flow in 2005. He has a $9 target.
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