Sirius XM (SIRI) has had a great 2018, but at some point, it seemed that the steam that has been driving the stock upwards by over 40% in the last six months would need to blow off a bit. That blow-off has transpired over the last couple of days. The stock seemed poised to make a run at $8 per share, but even the most ardent fan of the company had to think that the top was near and that the equity would at least need a period of settling down and consolidating.
Pivotal Research analyst Jeffrey Wlodarczak downgraded the stock to hold from buy, stating:
"We don't take this move lightly as we have had a buy on the shares of Sirius since early 2010, but at current levels the shares are trading at what we view as fair, but undeniably rich, valuation."
An interesting note is that the analyst has not changed his rating on Liberty Sirius XM (LSXMA) (LSXMK). The analyst noted that Liberty Sirius XM, which holds 72% of Sirius XM's stock, has been trading at historically high discounts to the underlying value of the shares it holds. That gap is now above 30% and has a value of about $8 billion. The substantial discount of the Liberty stake has been something that I have been discussing quite a bit. Liberty has been making some moves to narrow that gap to a more reasonable 15% to 20%, but with Sirius XM on a stellar climb, it has been difficult. In many ways, the recent downgrades of Sirius XM could assist in narrowing that gap.
