Dish Net Basks in 'Buy’ Call

1/31/2009 2:00 AM Eastern

Dish Network shares rose sharply last Wednesday after one analyst raised her rating on the stock and another predicted the troubled satellite-TV provider would increase its customer base in the fourth quarter.

Dish stock rose $1.29 each (10.8%) to $13.22 on 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. “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 provider could post a subscriber gain in the fourth quarter.

AT&T said it added 8,000 satellite-TV customers in the quarter — and 264,000 additional IPTV subscribers — which Eagan believes could translate into 50,000 more customers for Dish. The analyst had previously estimated that Dish would add 35,000 customers in the period. Eagan said he expects Dish to profit from subscriber losses at rival DirecTV. The analyst estimated that DirecTV, which services some AT&T satellite subscribers through an old agreement with BellSouth, 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.