An analyst's newfound confidence was music to some investors' ears on Tuesday. By Bob Frick, Senior Editor August 22, 2006 For much of 2006, it must have seemed as though the sky was falling for shareholders of XM Satellite Radio. The stock (symbol XMSR) had plunged from $30 to a little more than $11 before the opening of trading Tuesday. There were good reasons for the decline: Customers weren't renewing at anticipated rates, and the Federal Communications Commission was leaning on the company because satellite radio car receivers were interfering with FM reception in nearby vehicles.But then Bear Stearns analyst Robert Peck issued a report that turned his "underperform" rating to "outperform." Peck figures that the bad news has largely run its course, and that the market has overreacted. It certainly reacted to his upgrade, as XM's stock soared 20% on Tuesday to close at $13.52. The rally spilled over to rival Sirius Satellite Radio (SIRI), whose shares climbed 3.6%, to $4.03. Peck listed 12 reasons why XM's stock should perform better. On top of the list: XM and the FCC are about to reach an agreement on toned-down receivers that will still deliver great audio; sales at retailers are holding up and should pick up for the 2006 holiday season; the company has enough cash to get it through these tough times; and management is stronger. Also, despite shock jock Howard Stern's move to Sirius and Sirius's recent deals with the National Football League and Nascar, XM's programming is sound enough to maintain its audience's loyalty and attract new listeners. Peck says his $17 target price on XM stock by the end of 2007 is based on conservative numbers. The company, for example, is predicting 18 million to 19 million subscribers by 2010, but Peck is figuring just 16.5 million. Still, this is not a stock for chicken-hearted investors. Analysts, on average, expect XM to lose $2.63 a share this year and $1.79 a share in 2007. Peck is slightly less negative, seeing a loss of $2.61 per share this year and $1.52 next.