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SIRIUS XM Teams with Ashbury

Zacks Equity Research

SIRIUS XM Radio Inc. (SIRI) recently announced a strategic partnership with Ashbury Automotive Group (ABG) in order to provide radio service to the latter’s pre-owned vehicles.

One of the leading automobile retailer and service provider in the US, Ashbury currently boasts 4,000 dealers operating in the U.S. Thus, we believe that the partnership with Asbury will provide SIRIUS XM the leading edge to expand their market share.

In the last quarter of fiscal 2011,SIRIUS XM added nearly 540,000 customers, which in itself is a record since 2008. So we continue to believe that such strategic partnerships with different car manufacturers and dealers coupled with improving U.S. economic conditions will further increase the company’s subscriber base going forward.

In December, 2011, SIRIUS XM launched the advanced version SIRIUS XM 2.0 called “Lynx.” Lynx is touted as the next-generation satellite receiver that allows the subscribers to stream content to home audio systems via Bluetooth. It also features high-resolution touch screen support and allows 200 hours of music storage, hence providing more options to the users to access their favorite music anytime and from anywhere. Such an innovative product launch will certainly act as catalyst for growth for the company going forward.

Despite higher programming cost and stiff competition from Pioneer System and other media players like Cumulus Media Inc. (CMLS), we believe that the company will perform well mainly based on increased programming line ups and improved ratings.

We maintain our long-term Outperform recommendation for SIRIUS XM. Currently, the company has a Zacks #3 Rank, implying a short-term Hold rating.

Based in New York, SIRIUS XM provides satellite radio services in the U.S. and Canada. 

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