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Morgan Stanley
Oct 30, 2026 · SIRI
Tags: satellite-radio subscriber-quality cost-efficiency spectrum
Value Score: 8.5/10
Core Conclusion: Morgan Stanley retains Underweight and a $28 target on SiriusXM. Cost reductions have exceeded expectations and supported earnings despite flat revenue, but free add-on accounts and other initiatives obscure the underlying subscriber trend. The October 30 report sees improving leverage and future distribution opportunities as offsets, while questioning how long cost savings can compensate for weaker demand.
Expense control, rather than revenue growth, drives the earnings improvement. Third-quarter adjusted EBITDA grew about 3% year on year on broadly flat revenue. Programming expense fell 7%, extending savings after an operating-cost base that had already declined about 10% over the preceding two years. Morgan Stanley lifts its adjusted EBITDA forecast by roughly 1%, while leaving its overall revenue forecasts unchanged (pp1-2).
Reported subscriber losses understate the deterioration in the bank's adjusted series. Management expects reported annual self-paid losses broadly similar to last year's roughly 300,000. Morgan Stanley's chart instead estimates 639,000 losses for 2026 after removing identified support, versus 331,000 in 2025. Companion Plans, free add-on accounts included in the self-paid classification, contributed 354,000 additions year to date. The chart includes year-specific adjustments, so its figures should be read with the annotations rather than as an entirely uniform measure of organic demand.
Source: Exhibit 1: Adjusted self-paid subscriber additions and plan-related adjustments
Higher guidance confirms execution but not a demand inflection. Full-year revenue, adjusted EBITDA and free-cash-flow guidance each rise $25m, to $8.55bn, $2.65bn and $1.40bn, respectively. The bank describes these levels as largely in line with consensus before results. Its caution therefore concerns the durability of earnings support rather than denying the current cost achievement (p1).
Continuous plans have largely removed vehicle-related churn this year, creating a benefit that will soon be lapped. Extended Duration plan sales rose 80% year on year. The authors understand that automakers largely fund those plans, even though their thre
