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Friday, August 25, 2006

The Analyst Call of the Week

Some weeks there are incredible calls from brokerage firm analysts, and some weeks there are dismal calls. This week's most impressive call goes to Robert Peck of Bear Stearns for his upgrade on XM Satellite radio (XMSR) where he took the stock from an Underperform to an Outperform rating. He noted that the company and the FCC were close to having issues resolved and that the units would ship in time for the holiday season. The release confirmed this this morning. We noted that the shares were up 5.7% earlier, but now they are up almost 8% at $13.93 on the news. Shares closed the day out at $11.24 this Monday before his Tuesday upgrade, meaning the stock is up 23.9%. It is even remarkable that there has not been a "sell the news" reaction to the event.

The most recent data for August's short interest had the stock with over 28 million shares in the short interest. While that represents about 12.5% of the free float, it is far under the 37 million shares in the short interest for the month of july. It looks like some of the smarter short sellers were covering ahead of the FCC and after Cramer was calling on Sirius (SIRI) to try to acquire XM.

While we often feature negative analyst calls, the street is likely tipping their hats to Mr. Peck at Bear Stearns this week.

Jon C. Ogg
August 14, 2006
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