In a report published today, Barclays upgraded the shares of Sirius XM Radio (SIRI) to Overweight from Equal weight, but maintained its price target at $4.00 suggesting 26 percent upside.

“Over the last six months, SIRI equity has underperformed the market by more than 20%. Based on our conversations with investors, this could be driven by: (1) concerns around subscriber growth on the back of trends over the last few quarters and SIRI’s guidance and auto sales YTD; (2) concerns on the impact of GM’s auto recalls; and (3) news on the competitive impact of Apple launching a streaming music service. In our opinion, apart from the subscriber trends, none of the other reasons should have any material relevance” Barclays said in a note to clients

“In our opinion, SIRI is likely to be increasingly viewed as a capital return story rather than a growth story. Despite the slowdown in subscriber growth, we forecast FCF to grow at ~18% on an absolute basis and ~26% on a per share basis (2013-2016 CAGR), driven largely by the company’s operating leverage” it added

Shares of Sirius XM Radio (SIRI) closed at $3.17 on Tuesday

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