Shares of Sirius Satellite Radio Fall on Analysts’ Downgrades

In unusually heavy trading, shares in Sirius Satellite Radio Inc. fell 23% on Wednesday after two analysts said the stock was expensive and lowered their recommendations.

Sirius fell $2.11, to $6.90, on Nasdaq. About 580 million shares changed hands, the most in a single stock since July 2002.

Shares of Sirius, the second-largest pay radio service behind XM Satellite Radio Holdings Inc., had more than doubled in the last two months after the company signed Howard Stern as a broadcaster and hired former Viacom Inc. President Mel Karmazin as chief executive.

“While we remain bullish on company fundamentals, we believe the recent surge in the stock has taken Sirius to levels which are difficult to justify using any reasonable valuation framework,” said Niraj Gupta, a Smith Barney analyst. He cut his rating to “sell” from “hold.” A Bear, Stearns & Co. analyst also cut his rating.

XM Satellite also retreated Wednesday. The shares fell 41 cents to $38 on Nasdaq.

An average of almost 100 million shares of Sirius had traded each day for the last three months.

“It’s the casino mentality,” said David Briggs, head of trading at Federated Investors Inc. “A lot of people get attracted to something that has high volume and a low dollar price.”