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Morgan Stanley Downgrades Dish Network, Says Spectrum Assets Are Losing Value

Morgan Stanley Downgrades Dish Network, Says Spectrum Assets Are Losing Value
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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

Sep 2018Morgan StanleyMaintainsEqual-WeightEqual-Weight
Aug 2018Moffett NathansonDowngradesNeutralSell
Jul 2018Credit SuisseInitiates Coverage OnUnderperform

View More Analyst Ratings for DISH
View the Latest Analyst Ratings

Posted-In: Benjamin Swinburne Morgan Stanley satellite Simon FlanneryAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


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