Whether or not the merger with Sirius goes through, Goldman Sachs analyst Mark Wienkes still doesn't like XM, and downgraded shares of XM Satellite Radio Holdings Inc. from Neutral to Sell this morning.
"We could be wrong in the near-term, if the DOJ approves the proposed merger," says Wienkes. “That said, our downgrade is valuation based and contemplates possible short-term price swings whether the DOJ approves or rejects."
"Deal or no deal, we think the current valuation incorporates a view too close to optimal, e.g. DOJ and FCC approvals with few conditions and subsequently, near-certain realization of all potential synergies,” added Wienkes.
Bottom line: “With the majority of the upside baked in, we recommend investors sell XMSR.”
And what about Sirius? Pretty much just like XM, only worse, says Winkes: "In our view, SIRI (Sell) shares are subject to the same merger issues as XMSR shares coupled with a less favorable business model and trends."