Next Stop for Sirius XM: $4?

Price targets just keep inching higher for Sirius XM Radio (NAS: SIRI) .

According to Wall St. Cheat Sheet, Bank of America Merrill Lynch has added the satellite radio provider to its U.S. 1 List of stock recommendations. Perhaps the most impressive nugget in the report is that the brokerage giant has a $4 price target on the shares.

Sirius XM has come a long way, and that's not just because it hit a fresh four-year high today.

Four years ago it seemed as if the satellite in the sky was falling. Goldman Sachs analyst Mark Wienkes slapped a price target of $0.25 a share on the stock. It seemed cruel at the time, but he was right. The stock traded as low as $0.05 a share just a few months later.

However, nobody's looking at nickels or quarters these days. Shortly after Liberty Media (NAS: LMCA) kicked a healthy infusion of capital into the media company -- assuring its near-term survival -- investors began to buy back in.

No one doubts Sirius XM's viability these days. The company is growing, consistently profitable, and generating a ton of free cash flow.

It's not just price targets creeping higher. Sirius XM has now boosted its 2012 subscriber target three times this year.

Skeptics never thought it would happen. They branded satellite radio as a transitory technology. Apple (NAS: AAPL) and Pandora (NYS: P) would be the death of Sirius XM. Why would an iPhone owner streaming Pandora for free keep paying for radio?

Well, it seems as if Apple, Pandora, and Sirius XM have all been able to have their cake and wolf it down, too.

Apple continues to sell more smartphones with every annual refresh. Pandora is streaming 70% more content than it was a year ago. Yet Sirius XM is still managing to grow its revenue at a double-digit percentage clip.

So, sure, $4 is a big round number for a stock that was trading for pocket change just a few years ago. However, if Sirius XM keeps doing what it's doing, this won't be the last of the juicy price targets.

Running of the bulls
If you'd like to learn more, I recently wrote a premium report on Sirius XM Radio, detailing the challenges and opportunities that await investors whether they're long or short the dynamic media giant. A year of free updates is included with the report, so you'll be in-the-know as changes occur. Click here to check it out now.

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