Deutsche Bank's analyst Bryan Kraft believes that SiriusXM is undervalued, citing a disconnect between current consensus estimates and the company's potential performance in 2027 and 2028. The bank has increased its price target for SiriusXM shares from $31 to $45, indicating a possible 63% upside from the stock's recent closing price.
Kraft pointed out that SiriusXM's new role as the exclusive U.S. audio advertising representative for Alphabet's YouTube could significantly boost revenues, potentially adding $2 billion annually by 2029 with a high-teens EBITDA margin, translating to an EBITDA contribution of $350 million to $400 million.
This partnership, along with an expanded collaboration with Amazon, positions SiriusXM for growth that the market has not fully recognized. Despite concerns regarding Berkshire Hathaway's increasing ownership stake, which could lead to strategic changes in dividends or buybacks, Kraft does not see this as a major risk for investors at this time.
Currently, among 16 analysts covering SiriusXM, there is a mixed outlook, with eight holding a 'hold' rating and only four recommending a buy. The stock has already appreciated by 38% year to date, indicating positive market sentiment that may continue to build following Deutsche Bank's bullish stance