Shares of Sirius XM Holdings SIRI rose as much as 3% higher after Goldman Sachs upgraded the stock to Buy from Neutral, raising its price target to $37 from $33, citing improving business trends, YouTube monetization potential, and the strategic value of its spectrum assets.
New PT represents about 26% upside from the stock's last close.
Analyst Stephen Laszczyk said the upgrade reflects a more durable outlook for Sirius XM's SIRI core satellite radio business and the addition of more robust contributions from its YouTube advertising partnership beginning in 2027.
Laszczyk sees the YouTube partnership and other third-party advertising opportunities generating an incremental $1 billion in revenue and $125 million in adjusted EBITDA by 2030. They also raised its valuation of Sirius XM's SIRI spectrum assets to $12 per share from $10, citing greater visibility into their strategic value.
The analyst said improving free cash flow conversion, as satellite capital expenditure declines, could create opportunities for higher capital returns.
The brokerage noted that Sirius XM SIRI shares had outperformed the S&P 500 over the past year, gaining about 40% versus 10%, but still sees upside to consensus estimates and believes the stock has room to "better reflect these incremental opportunities."