Analyst Says Dish Network Doesn't Need M&A To Be A Buy Today

Despite enduring threats by bundle providers and over-the-top services, something sparkles in the traditional DISH Network Corp DISH model.

Dish dropped nearly 17 percent in the last three months, and between the pullback and a range of potential business opportunities, Jefferies considers the stock the “most compelling investment” in the firm’s coverage.

“We have never believed a seminal event is needed to realize the value in DISH shares and believe there are many outcomes and opportunities for DISH shareholders to reap meaningful rewards,” analysts Mike McCormack and Scott Goldman wrote in a Monday note.

What’s On The Table?

For one, there’s the potential to monetize its spectrum through a partnership, lease, auction or sale. Jefferies sees little chance in new technologies obviating this critical asset.

“We believe other investor concerns regarding small cells and various densification efforts to remove reliance on spectrum are overblown, with spectrum remaining the lifeblood of wireless service providers,” McCormack and Goldman wrote.

The analysts consider the threat of 5G not only distant but also limited in reach, particularly due to its high cost. By their assessment, excitement surrounding the disruptive alternative is “premature.”

What The Numbers Look Like

Jefferies maintains a Buy rating on the stock with an $80 price target, suggesting 50-percent upside from a current value of $53.26.

“At the present share price, we estimate the market is valuing DISH’s spectrum at about $0.74 per MHz-POP, roughly a 45 percent discount to our estimate,” McCormack and Goldman wrote. “Given the on-going demand for spectrum amid rapidly rising bandwidth needs as well as the scarcity of spectrum expected to become available, we expect this disparity to narrow over time.”

The analysts see increased tax efficiency driving additional upside of up to $23.

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