Dish Shares Soar
Analyst Reports Fuel 11% Rise
Mike Farrell -- Multichannel News, 1/28/2009 1:54:37 PM
Dish Network shares rose sharply in early trading Wednesday after one analyst raised her rating on the stock and another predicted the troubled satellite TV service provider would increase its customer base in the fourth quarter.
Dish stock rose $1.36 each (11.4%) to $13.29 in early trading Jan. 28 after Goldman Sachs analyst Ingrid Chung raised her rating on the stock from "neutral" to "buy," noting that most of the bad news for the company has already been baked into the stock price. Chung also estimated that Dish will show an improvement in operations in the fourth quarter - or at least a moderation in deterioration.
"While riskier than other pay TV stocks, we believe that Dish shares carry the most potential upside," Chung wrote in a research report.
Collins Stewart analyst Tom Eagan maintained his "hold" rating on the stock but wrote in a research report that based on AT&T U-Verse IPTV growth - Dish has a resale agreement with AT&T until February - the second largest satellite TV service provider could post a subscriber gain in the fourth quarter.
AT&T said Wednesday that it added 264,000 U-Verse customers in the quarter. The company also said it added about 8,000 satellite TV customers in the period, versus a loss of 53,000 satellite subscribers in the third quarter.
In a research report, Eagan said those 8,000 satellite additions could translate into a gain of about 50,000 subscribers in the period for Dish. That's up from the 35,000 additions that Eagan had previously expected at the satellite TV company. Dish Network shed 10,000 subscribers in the third quarter, its second straight quarter of customer losses.
Eagan said that he expects Dish to profit from sub losses at its rival DirecTV. The analyst estimated that DirecTV, which services some AT&T satellite subscribers through an old agreement with Bell South, lost about 38,000 AT&T satellite customers.
Eagan noted that he is likely alone in his assumption that Dish will add customers.
"The idea that Dish may add subs is a non-consensus view," Eagan wrote.
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