Committed Sirius Investors (and Wannabes) Consider Going All In

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NEW YORK ( TheStreet) -- With shares of Sirius XM still under pressure, it was recently suggested to me that now might be a good time to "back up the truck." I declined.

Sirius shares are down almost 4% year-to-date as of Thursday's close, despite bullish notes by two separate analysts over the past week.

Last Friday , Jessica Reif Cohen, analyst at Bank of America , issued a buy rating on the stock and slapped it with a $5 price target. Monday, it was Evercore Partners reinstating Sirius stock with an "overweight" rating, while placing a $4.50 price target on the shares.

So why is Sirius' stock not behaving the way these analysts believe they should? What are they seeing that the rest of the market isn't? While I can't speak for the rest of the market, I can certainly tell you what I see.

First the good points; Sirius has undoubtedly done well over the past year. The company has defied skeptics and has steadily grown free-cash-flow. Even more impressive, Sirius has achieved this in the face cheaper alternatives from the likes of Pandora and Spotify. But this is all about to change. And the company has already shown the signs.

Sirius relies predominantly on new car sales for its subscription revenue and profits. Over the past five years, Sirius' stock has benefited greatly from a strong auto sales market. According to Edmunds, an automobile research firm, things are supposed to be even rosier in 2014, in terms of light vehicle sales. Citing "pent-up demand," Edmunds projects 16.4 million cars will be sold this year.

But last week when Sirius reaffirmed its guidance for 2014, I didn't get a sense of the same confidence. Should investors worry? Sirius projected to have 1.25 million in net subscriber additions and forecasted its revenue to reach over $4.0 billion. These numbers sounded good at the outset. But they don't correlate to Edmunds' projections.

Edmunds' forecast of 16.4 million cars suggests year-over-year growth of 6% above 2013. Sirius' 2014 revenue is projected to increase only 4%. Now it's possible that management is just being cautious and don't want to set the company up for failure. After all, Sirius has (in the past) been accused of low-balling guidance. But in case, I believe management is telling the truth.

Let's not forget, towards the end of 2013, Sirius' growth began to slow. This is even though auto sales had remained robust to the extent that Edmunds (as noted) used the term "pent-up demand" to describe 2014 projections. But for all of 2013 , Sirius posted a 17% year-over-year decline in net subscriber additions. This is while self-pay subscribers, or those not on promotional trials, declined 9%. Even more frightening is the 11% increase in customer cancellations .