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Tickers in this Article: SIRI, P
We reaffirm our long-term Neutral recommendation on SIRIUS XM Radio Inc. (SIRI) - the leading broadcast radio service provider in the U.S. following its robust third-quarter 2012 results. The bottom line of the company met the Zacks Consensus Estimate while the top line surpassed the same. Sirius XM reported record revenue growth on the back of higher subscriber addition and strong growth in auto sales. Moreover, a continuous debt reduction along with the recent authorization of a $2 billion share repurchase plan and payment of dividend will continue to boost shareholders' wealth in the years to come.

SIRIUS XM has a very strong business relationship with the original equipment manufacturers. The company owns an extensive satellite network, covering the whole U.S. that provides audio contents through more than 170 channels.

SIRIUS XM also projected a rosy picture for the rest of 2012. SIRIUS XM is now expecting to add 1.8 million net subscribers in 2012 compared with its previous estimation of 1.6 million net subscribers. This is the third time that the company raised its net subscribers' addition for fiscal 2012.

Furthermore, the company has recently raised $400 million through the issue of senior notes due in 2022. For this new issue, Moody's Investor Services has upgraded the company's Corporate Family rating to B1 and Probability of default to Ba3. On the other hand, Standard & Poor's Rating Services has assigned its "BB" issue-level rating and "3" recovery rating. The outlook remains stable.

Despite such positive traits, volatile macro-economic condition coupled with stiff competition from Pandora Media, Inc. P) and Pioneer System's newly launched car stereo called "AVIC-X920BT", which supports Internet radio may hurt Sirius XM's profitability going forward.

Currently, it has a Zacks #3 Rank, implying a short-term Hold rating.

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