Sirius XM Holdings Inc. (SIRI), a satellite giant in the U.S, raised its 2014 subscriber guidance buoyed by domestic new vehicle sales that came in at a record high in August this year, ever since Jan 2006. Following the development, the company’s shares jumped 1.2% yesterday in an after-hour trading session.
Sirius XM now expects net subscriber addition of nearly 1.45 million in 2014, up from its prior guidance of roughly 1.25 million. The company also reaffirmed its recently increased 2014 financial guidance. Management expects full-year 2014 revenues to reach the $4.1 billion mark while adjusted EBITDA is projected to be around $1.425 billion. Free cash flow will likely be $1.1 billion.
Robust auto sales numbers are a real boost for Sirius XM as the company is largely dependent on the trends within the auto industry. Therefore, even a minor fluctuation in auto sales may significantly affect the company’s financials. In order to increase its subscriber base, the company has already sealed a couple of important deals. Sirius XM signed agreements with Ford Motor Co. (F) and Chrysler Group on June 19 and 25, respectively, whereby the company will provide Ford and Chrysler's customers with a complimentary five-year subscription to its navigation packages, SiriusXM Traffic and SiriusXM Travel Link.
Notably, the company holds strong telematics partnerships with almost all major car manufacturers including Acura, BMW, Honda, Hyundai, Infiniti, Lexus, Nissan and Toyota.
Sirius XM currently has a Zacks Rank #3 (Hold).
Other Stocks Worth Considering
Stocks that warrant a look in this Industry are Baidu, Inc. (BIDU) and Saga Communications Inc. (SGA). Baidu sports a Zacks Rank #1 (Strong Buy), whereas Saga Communications holds a Zacks Rank #2 (Buy).
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