XM Satellite Is 'Superior Investment' To Sirius 04.06.05, 9:42 AM ET Goldman Sachs initiated coverage of Sirius Satellite Radio (nasdaq: SIRI - news - people ) at "underperform" and initiated coverage of XM Satellite Radio Holdings (nasdaq: XMSR - news - people ) at "in-line." Goldman said that rising anticipation ahead of Howard Stern in 2006 may support sentiment for Sirius but has "relatively less attractive fundamentals, sizable dilution, a longer trek to breakeven, overly optimistic market expectations and an aggressive valuation should result in Sirius lagging our radio coverage group." The research firm acknowledged that Sirius "has vastly improved its business viability since its March 2003 recap but cash-flow breakeven timing remains elusive as content expenses ramp up materially in coming years." Sirius' new management "lends credibility to the potential ad stream, but again, timing is critical and likely more protracted than current expectations as advertisers wait for critical mass," Goldman said. The firm's discounted cash-flow and price/earnings-to-normalized growth analyses "imply a fair value of $4 per share" for Sirius. XM Satellite's lead in fundamentals, technology, and subscribers "positions it as the superior investment within the satellite radio subsector while better relative fundamental growth and quicker timing to cash-flow breakeven support XM's valuation." However continued operating losses with positive earnings before interest, taxes, depreciation and amortization "still two years away" and optimistic industry estimates "offset positive marketplace momentum and limit long-term gains," Goldman said. XM Satellite's recent price increase and OEM ramp-up of XM-equipped autos could boost positive newsflow in the first half of 2005 and increase the valuation gap between the company and Sirius, the firm said. Goldman sees XM Satellite's fair value at $34 per share.