Motley Fool flags potential turnaround for Sirius, cites Berkshire's continued faith

Radio broadcaster Sirius XM Holdings is among the weakest-performing assets in Warren Buffett’s Berkshire Hathaway portfolio over the years, but 2026 could bring better returns for shareholders, according to Billy Duberstein, an analyst at the Motley Fool. Sirius XM stock is trading at a third of its value before the pandemic. Berkshire, however, has not reduced its exposure to the company. On the contrary, it has continued to increase its stake.

Since the beginning of 2020, Sirius XM’s share price has fallen about 70%. On Friday, January 2, the stock closed at $20.51 per share. That decline has not discouraged Berkshire, which has added to its position and now owns 37.1% of Sirius XM’s shares. Sirius XM ranks as the 13th-largest position in Berkshire Hathaway’s equity portfolio, Duberstein writes.

"Berkshire's continued faith in Sirius, combined with its bargain valuation, certainly makes Sirius an interesting stock," Duberstein writes. He argues that even with modest improvements, "which appear to be underway," 2026 could bring better returns.

Sirius XM is trading at a 2026 enterprise value/free cash flow multiple of 13.8 , which suggests the stock remains cheap, according to the Motley Fool analyst. At the same time, the company carries a heavy debt load of about $10 billion. That high leverage means small changes in the forecast can significantly impact what investors are willing to pay for the stock. So, "if Sirius can shift from top-line declines back to growth, even modest growth, its valuation multiple could change significantly," Duberstein concludes.

Sirius XM was formed in 2024 following the completion of a transaction with Liberty Media. The company’s portfolio includes its flagship SiriusXM subscription entertainment service, the Pandora music streaming platform, and a range of podcast assets.

Over the past two years, Sirius XM’s base of paying subscribers has declined, in part because of weaker sales of new cars, which remain a key channel for subscriber acquisition. This has weighed on the company's revenue, Duberstein writes. For 2024, the company reported revenue of $8.7 billion, a decline of nearly 3% year over year. "When combined with a substantial $10 billion in net debt on top of a $6.8 billion market cap," Duberstein says, "it's no wonder Sirius has seen its shares sell off."

Against this backdrop, Sirius XM is looking for new sources of revenue, including advertising. One such initiative is a partnership with Amazon, which is expected to to boost advertising revenue per user.

Duberstein also points out that the management has moved aggressively to cut costs. By 2025, the company had already achieved its target of $200 million in cost savings. He cites Sirius XM CFO Thomas Barry, who noted Sirius "wasn't stopping" at that target, and is continuing to restructure the cost basis of the business.

Wall Street remains generally cautious on Sirius XM’s outlook, according to MarketWatch data. Six analysts recommend "sell," the same number advise "hold," and only five rate the stock a "buy." The average target price is $23.54 per share, implying upside of nearly 15% versus the most recent closing price.