Liberty Media Corp (NASDAQ:LMCA) has been upgraded to Buy from Neutral by Citi, on forecasts that the company will soon be acquiring control of Sirius XM Radio.
Citi analyst Jason Bazinet said in a note that Liberty has sent about $1.4 billion in acquiring shares of the company in open market purchases and taking its stake to 49.6 percent from 40 percent.
He said that he expected the company to soon cross the 50 percent mark.
Once Liberty Media has a 50 percent stake in Sirius, it's likely that Sirius will begin a $3 billion stock buyback program that will allow Liberty to largely recoup its $1.4 billion investment while keeping a 50 percent stake in Sirius, Bazinet said.
He also set a price target of $3 a share for the Sirius stock over the next 12 months and $121 for the Liberty stock.
Liberty had saved Sirius from filing for bankruptcy in 2009 by lending it about $350 million in exchange for a stake of 40 percent in it.
There was an agreement between the companies that Liberty would not try to gain control of Sirius, but that agreement expired earlier this year.
Liberty has meanwhile been acquiring shares of the satellite radio services company and has openly declared its intention of taking control of it.
Shares of LMCA jumped 0.50%.
Sirius XM Radio Inc(NASDAQ:SIRI) has put out a very upbeat research call on Sirius XM, which is shortly about to be controlled by Liberty Media.
According to Bank of America Merrill Lynch the stock's got some 46 percent upsides to it from here to $3.75.
That positive outlook has also resulted in a But rating from the bank which is initiating overage.
The shares in the company have soared since the time it was near bankruptcy and Liberty Media saved it from oblivion by infusing about $350 million worth of funds in exchange for a 40 percent stake.
Will SIRI Continue To Hit New Highs? Find Out Here
If you'd bought it at a dime a share then, you're up 26 times on your money.
The BofA Merrill target is well above the current high analyst call. At the moment, the top price target is $3.35, and the average of all those following the stock is $2.75, a full dollar below what BofA sees coming.
Sales have risen from $600-plus million in 2006 to past $3 billion, it's gone from losses to profits on the bottom line in that time and EBITDA has turned positive since the days it was talked down regularly by the pessimists.
Shares of SIRI are up 3% to $2.64 and made multi-yearhigh of $2.68.