LYV - Sirius XM downgraded at Pivotal as firm believes Liberty SiriusXM 'dramatically better'

Sirius XM ( NASDAQ: SIRI ) shares ticked down on Monday as investment firm Pivotal said The Liberty SiriusXM Group ( NASDAQ: LSXMA ) is a "dramatically better" better way to own the satellite subscription company than its own stock.

Analyst Jeffrey Wlodarczak lowered his rating on Sirius XM ( SIRI ) shares to hold from buy and cut the price target to $7.10 from $7.55, noting the company's reduction in net subscribers additions for the rest of 2022 and concerns about a "significant" recession in the first-half of 2023.

"We highlight that we left our [Liberty SiriusXM] buy rating unchanged, which quite clearly from a fundamental perspective is a dramatically better way to own SIRI given it continues to trade at historically wide discount to [net asset value] (nearly 50%) of which 75% is in SIRI shares (with the balance being [Live Nation Entertainment] ( LYV )," Wlodarczak wrote in a note to clients.

Sirius XM ( SIRI ) shares fell fractionally in premarket trading, while SiriusXM Group ( LSXMA ) rose marginally.

In addition, Wlodarczak noted that the odds are rising that Liberty could "hard spin" SiriusXM Group ( LSXMA ) in the fall, which likely would "materially" narrow the gap and eventually result in a Reverse Morris Trust merger with Sirius XM ( SIRI ) at a premium, ultimately resulting in an 80% gain for SiriusXM Group ( LSXMA ).

Last week, Sirius XM Holdings ( SIRI ) reported second-quarter results and it maintained its full-year guidance on revenues and core earnings, while sticking with its subscriber forecast .

Analysts are universally positive on Sirius ( SIRI ). It had an average rating of BUY from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Seeking Alpha's quant system, which consistently beats the market, also rates SIRI a BUY .

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