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Brand Face-Off: Sirius XM Holdings Inc. (SIRI) vs. Pandora Media Inc (P)

Evaluating SIRI and P from technical and sentiment viewpoints

by 12/16/2013 12:51:03 PM
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From the outside, Sirius XM Holdings Inc. (NASDAQ:SIRI) and Pandora Media Inc (NYSE:P) appear to be quite similar, as both are key players in the streaming radio industry. And, while Wall Street has, for the most part, treated the two as equals, a look into each stock's technical performance in 2013 shows that the two companies are not as alike as one may think.

Pandora has been a powerhouse on the charts this year, achieving technical milestones along the way -- the stock reached record-high levels at $31.94 on Nov. 15. At the equity's current perch of $26.42, the shares have nearly quadrupled in value year to date, outperforming the broader S&P 500 Index (SPX) by about 162 percentage points in that time frame. Meanwhile, Sirius has also seen gains in 2013, with its shares up 23.2% year-to-date to trade at $3.56. More recently, however, the stock has not fared as well. Since tagging a six-year high of $4.18 on Oct. 23, the equity has shed 14.8%, partly due to a poorly received earnings report at the end of October.

Daily Chart of P since January 2013

Daily Chart of SIRI since January 2013

Despite such technical differences, both Sirius and Pandora have received "strong buy" endorsements from at least 60% of their respective covering analysts. The remaining analysts maintain "hold" or worse ratings. Considering SIRI's recent downturn, the equity may face additional headwinds in the near term, as the bullish brokers switch to the bearish team. Meanwhile, P could receive an extra push, should its skeptics upgrade their positions.

Furthermore, Pandora and Sirius have both racked up notable short interest levels. Specifically, 16.2% of P's available float is sold short, while these bearish positions account for 11% of SIRI's stock. For outperforming P, this means future short-covering activity may be in the cards, which could benefit the shares.

Finally, option traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have been extremely bullish toward Sirius. The equity's 10-day call/put volume ratio on these exchanges comes in at 31.44, which is the highest of all other similar readings from the past year. In other words, option traders have bought to open SIRI calls over puts at an annual-high rate during the past two weeks. An unwinding of these bullish bets -- particularly at out-of-the-money strikes -- in the near term could translate into some options-related resistance.

On the other hand, Pandora's comparable 10-day call/put volume ratio of 0.73 ranks in the low 16th percentile of its annual range, showing a much higher relative preference for puts over calls among P speculators during the same time frame. Should P continue to outperform on the charts, this heavy accumulation of bearish bets could turn into options-related support soon.

Given each stock's technical performance in 2013, both Sirius XM Holdings Inc. (NASDAQ:SIRI) and Pandora Media Inc (NYSE:P) could continue on their respective paths, as speculators on Wall Street rethink their stances on the equities.

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