Dish upgraded at Barclays on potential catalysts of EchoStar, T-Mobile deals
MWelsh
Barclays Capital upgraded Dish Network (NASDAQ:DISH) to Equal Weight from Underweight and raised the price target to $10 from $5.
Barclays' analysts said the Dish and EchoStar (NASDAQ:SATS) merger deal and potential exercise of spectrum purchase option with T-Mobile (TMUS) should get Dish at least another year, if not more, to deal with its capital needs.
The analysts added that Dish came in lower versus the firm's estimates on overall EBITDA due to Wireless EBITDA coming in lower compared to estimates.
While Boost has been struggling for a while, it is still surprising to see negative EBITDA in that business in what tends to be a seasonally stronger quarter for Boost usually. Dish's wireless net adds also saw an acceleration in the pace of declines after some stabilization in the last couple of quarters, despite the launch of its post-paid service, the analysts added.
However, the Echostar deal and any progress on the T-Mobile deal are likely bigger catalysts for the stock, according to the analysts.
The firm noted that these steps should end one of the biggest concerns in near term, which is Dish's ability to fund upcoming maturities. Based on management's comments on the merger call, the analysts said that, it seems that the company's ambitions in wireless are even more modest than their already modest scale.
The new capex guide is even lower than an already low outlook which means the network would be only a barebones 'check the box' measure to maintain spectrum licenses, according to the analysts.
Thus, the firm added that, Dish's strategy seems to be to buy time but if this is deliberate then it could be backed up by some more concrete monetization considerations at some point.
Due to this background, Dish's stock could be a slow and directionless grind despite the removal of short-term liquidity risks, the analysts noted.
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