XM Satellite Radio's [XMSR] recent share price weakness, coupled with its funding needs, led Lehman Brothers [LEH] to reduce its 12-month stock price target for the company.
William Kidd, the satellite analyst at Lehman Brothers, also said he anticipated dilution of the XM with its future financing. His reasoning spurred the drop in Lehman Brothers' 12-month stock price target. The target now is $12.50 a share, down from $16 a share.
XM had a good second quarter, but the results won't be a catalyst for the stock's value because the market had expected good news, Kidd said. Focus now is squarely on XM's earnings before interest, taxes, depreciation and amortization and its near-term subscriber ramp, he added.
In addition, pressure is mounting for XM management to raise their guidance for the company's third-quarter subscriber base of 200,000 and for its full-year base of 350,000, Kidd said.
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