Soleil Securities Friday initiated coverage of both DirecTV and Dish Network shares with an “underweight” rating and established 12-month price targets significantly lower than their current trading prices.
However, neither stock appeared to be impacted by the subdued outlook in Friday trading as Dish shares closed up 25 cents to $33.91 while DirecTV shares finished up 56 cents, or 2%, at $27.92.
The equity research firm started Dish Network with an “underweight” rating and established a 12-month price target of $24 a share, roughly 29% below its current trading price.
In its research note, the firm said “although the stock has lagged its peer, DirecTV recently, the same investment thesis that 1Q08 inflection point where telco took more video share than satellite/cable applies and in the absence of a hedge against Dish’s single product, video, Dish’s competitors offer a comparable video product that can be subsidized with Internet, telephony and wireless.”
The firm also initiated coverage of DirecTV with an “underweight” rating and set a 12-month price target of $21 a share, about 24% below the satellite provider’s current trading price.
“While the stock has been performing well, our negative view is based on a critical market share crossover in 1Q08: telco took more video share than satellite/cable. We expect DTV to continue to lose share relative to the price/value of competing subscription video packages and note that in its single product, video, competitors offer a comparable video product that can be subsidized with Internet, telephony and wireless.”
Dish shares rallied up to a 52-week high of $52.54 in October while DirecTV shares, also in October, peaked at $29.10 a share.