Morgan Stanley Downgrades Dish Network, Says Spectrum Assets Are Losing Value
There telecom sector has many moving parts: new policies from the Federal Communications Commission, increasing diversity among competitors and attempts to contract the market.
In this environment, DISH Network Corp (NASDAQ: DISH) is losing value, according to Morgan Stanley.
The Rating
Morgan Stanley analyst Benjamin Swinburne downgraded Dish from Overweight to Equal-weight and lowered the price target from $75 to $55.
The Thesis
The thesis is largely based on Dish’s diminished options to monetize its wireless spectrum and sell its assets.
“We continue to trust in DISH's management team to ultimately make the right capital allocation decisions, but we also have to acknowledge the market dynamics around DISH have shifted,” Swinburne said in a Wednesday note. (See the analyst's track record here.)
The value of Dish’s spectrum assets are seen to decline as the FCC considers a new auction and as potential buyers like T-Mobile Us Inc (NASDAQ: TMUS) acquire their own spectrum. Any remaining acquisition interest by T-Mobile is expected to meet regulatory challenges.
Morgan Stanley now views Verizon Communications Inc. (NYSE: VZ) as possibly the only suitor for Dish, and its financial position supports small cell deployments over spectrum acquisition, Swinburne said.
At the same time, Dish is facing significant competition for its Sling streaming product, and the pay-TV industry has continued challenges, the analyst said.
Morgan Stanley projects a stable core broadcast satellite business strengthened by low churn and consistent free cash flow.
Price Action
Dish was down 4.75 percent at $45.71 at the time of publication Wednesday morning.
Related Links:
What The FCC's Net Neutrality Repeal Means For You
Dish Surges As Airwave Case Returns To FCC
Latest Ratings for DISH
Jan 2018 | Morgan Stanley | Downgrades | Overweight | Equal-Weight |
Nov 2017 | Barclays | Maintains | Overweight | |
Nov 2017 | UBS | Maintains | Neutral |
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