Sirius XM Holdings. Inc. (SIRI) a provider of satellite radio and online radio services delivered better-than-expected second-quarter results driven by growth in subscribers and advertising revenue. Shares jumped 5.2% on the announcement closing at $6.71 on July 27.
Earnings for the quarter doubled to $0.10 per share year-over-year, and beat analysts’ estimates of $0.07 per share.
Revenue climbed 15% to $2.16 billion from the year-ago period and outpaced the Street’s estimate of $2.06 billion.
The SiriusXM segment’s revenue grew 7% year-over-year, driven by a 4% increase in its average revenue per user (ARPU) to $14.57, coupled with an increase in self-pay subscribers.
The Pandora segment’s advertising revenue grew 82% year-over-year, driven by strong monetization of $100.35 per thousand hours at Pandora. (See Sirius XM Holdings stock charts on TipRanks)
Jennifer Witz, CEO of the company, said, “The quarter was bolstered by record self-pay churn of just 1.5%, and we achieved strong monetization in our advertising business, with an increase in ad revenue of 82% from the prior-year period and 20% from the second quarter of 2019.”
The company’s net new self-pay subscribers increased 34% to 355,000 compared to the prior-year period, in line with the company’s revised target of reaching 1.1 million subscribers by the end of 2021.
Additionally, the company also raised its full-year 2021 revenue projection to approximately $8.55 billion.
Following the results, Deutsche Bank analyst Bryan Kraft reiterated a Buy rating on the stock and lifted the price target to $8 (20.8% upside potential) from $7.75.
Kraft noted that both SiriusXM and Pandora witnessed solid subscription and advertising growth leading to an increase in full-year 2021 guidance by management.
Overall, the stock has a Moderate Buy consensus rating based on 6 Buys, 1 Hold, and 1 Sell. The average Sirius XM Holdings price target of $7.44 implies 12.8% upside potential to current levels. Shares have gained 12.8% over the past year.
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