Sirius XM Holdings slumps as analysts downgrade after 'massive' run
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Sirius XM Holdings (NASDAQ:SIRI) shares fell more than 8.5% in pre-market trading on Friday after a few Wall Street analysts downgraded the stock after a "massive" run since last month.
Pivotal Research analyst Jeffrey Wlodarczak lowered his rating on Sirius XM Holdings (SIRI) shares to sell from hold, but raised his price target to $4.50 from $4, noting the 115% gain since June 21 is the result of a low liquidity rally that has boosted many of the most shorted names on Wall Street and a re-weighting in the Nasdaq 100.
"While the outlook for a soft landing has improved + auto [Seasonally Adjusted Annualized rate] is headed in the right direction and â24 results should show a nice improvement it is frankly very difficult fundamentally to justify this valuation level for SIRI," Wlodarczak wrote in his note. 
Wlodarczak also pointed out that Liberty Media Corp Series A (NASDAQ:LSXMA), which owns roughly 82% of Sirius XM Holdings (SIRI), has "barely" participated in the rally, only rising 17% since June 21, despite the fact it's the controlling shareholder of Sirius XM.
"Obviously, the fact that LSXMA owns ~82% (=relatively small float) and heavy SIRI short interest (likely driven by the investors pairing LSXMA/SIRI) is a major contributing factor to the performance variance," Wlodarczak added. "We estimate that LSXMA is now trading at a worst ever ~60% discount to its publicly traded assets."
Evercore ISI analyst Vijay Jayant also cut his rating on Sirius XM Holdings (SIRI) to underperform from in line after the run, citing a lack in change in fundamentals.
"We believe this move is related to a short squeeze in a stock with a small float rather than any fundamental change in the business," Jayant wrote in an investor note. 
Deutsche Bank analyst Bryan Kraft also cut his rating on Sirius XM (SIRI), lowering his rating to sell from buy, while maintaining his per-share price target of $6.25.
"We believe this move higher has been driven by technical factors - very high short interest combined with buying ahead of the NASDAQ 100 rebalance after the close on July 21," Kraft wrote.
Sirius XM Holdings (SIRI) shares jumped 42% on Thursday and triggered multiple volatility halts.
Analysts are universally cautious on Sirius XM Holdings (SIRI). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a HOLD. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates SIRI a HOLD.
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