Sirius XM slips as Morgan Stanley downgrades on new subscriber concerns
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Sirius XM Holdings (NASDAQ:SIRI) shares fell almost 3%, Monday, as Morgan Stanley analyst Benjamin Swinburne downgraded the satellite broadcaster over concerns about slowing subscriber growth due to a weaker auto market.
Swinburne downgraded Sirius (SIRI) to underweight, and also lowered his earnings estimates both below the company's own guidance and Wall Street's consensus. However, Swinburne kept his $7-a-share price target on Sirius' (SIRI) stock intact.
Swinburne said that while the cable and satellite industry can offer a "relatively defensive business" model to investors, Sirius (SIRI) remains "the most cyclical in the group as a function of its exposure to US auto sales."
With that in mind, Swinburne lowered his estimate for Sirius' (SIRI) self-pay net additions to just below 400,000 for 2022, and 700,000 for 2023, compared to the company's outlook of roughly 500,000 for 2022 and Wall Street consensus forecast of 850,000 new paid subscribers 2023. 
In addition, Swinburne noted that advertising is now more important to Sirius (SIRI) since its 2019 acquisition of Pandora, and factored that into his downgrade.
Swinburne added that while Sirius (SIRI) has "a highly attractive business model," the company appears to be maturing and its organic growth is slowing. Swinburne estimates that Sirius' (SIRI) compound annual growth is likely to slow to be between 3% and 4% over the next five years, down from 10% to 11% in the five years prior to the Covid-19 pandemic. 
In March, Sirius (SIRI) added to its programming lineup by signing a deal with independent progressive media company CrookedMedia.