Sirius XM downgraded at Pivotal as firm believes Liberty SiriusXM 'dramatically better'
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Sirius XM (NASDAQ:SIRI) shares ticked down on Monday as investment firm Pivotal said The Liberty SiriusXM Group (NASDAQ:LSXMA) is a "dramatically 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.