DISH - DISH Network slips as UBS downgrades on subscriber loss worries M&A concerns

2023-03-27 08:38:37 ET

DISH Network ( NASDAQ: DISH ) share slipped more than 2% in premarket trading on Monday as investment firm UBS downgraded the satellite communications company, citing several reasons, including continued subscriber losses.

Analyst John Hodulik, who cut his rating on DISH ( DISH ) to neutral from buy and lowered the per-share price target to $10 from $27, also lowered his EBITDA estimates between 15% and 20% due to weaker subscriber trends, which appear to be accelerating due to the recent cybersecurity breach .

Late last month, Dish ( DISH ) CEO Erik Carlson told employees that a "cybersecurity incident" resulted in some data being "extracted."

Additionally Hodulik pointed out Dish ( DISH ) is seeing "higher" wireless dilution as it builds out its network alone and it's less likely that there will be any deals in the wireless space.

"We now factor higher wireless dilution amid DISH's entry into postpaid wireless in late '23, while  enterprise/wholesale 5G is taking longer to scale & the cyber incident (impacting call centers/online channels for weeks) adds pressure that is hard to quantify," Hodulik wrote in an investor note.

He now expects $1.1B and $860M in wireless losses in 2023 and 2024, up from prior views of $900M and $430M, respectively.

The analyst conceded that Dish's ( DISH ) spectrum is "undervalued" when it comes to the value of the company, at roughly 40 cents per MHz POP, well below the recent trends of 74 cents for 3.46 GHz and $1.11 for C-Band.

Nonetheless, the expectation that the company's leverage will rise is likely to "limit equity appreciation" unless it gives visibility into improved wireless losses, better subscriber trends or a "strategic optionality," Hodulik conceded.

Late last month, Bank of America issued a rare double downgrade on Dish Network ( DISH ), citing concerns about the company's wireless network plans .

Analysts are largely cautious on DISH Network ( DISH ). It has a HOLD rating from Seeking Alpha authors , while Wall Street analysts rate it a BUY . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates DISH a HOLD .

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