VSAT - EchoStar pops as Raymond James upgrades citing position in satellite industry

2023-08-07 08:45:07 ET

EchoStar ( NASDAQ: SATS ) shares rose more than 6% in pre-market trading on Monday as investment firm Raymond James upgraded the satellite company, citing its position at a "critical juncture" in the industry.

Analyst Ric Prentiss raised his rating on EchoStar ( SATS ) shares to strong buy from outperform, noting that it now has "significant capacity" thanks to the Jupiter 3, or J3, satellite. In addition, the company has a very strong balance sheet with $1.7B in cash and less than $200M in net debt, as well as "significant" fallow S-Band spectrum holdings.

Prentiss also said that with the launch and deployment of the Jupiter 3 satellite, it is "actively" working through possibilities for Horizon 3, including long-term strategic opportunities like M&A and S-Band monetization.

"While [Jupiter 3] still needs to undergo testing and then go into full service, and we are eagerly watching for updates, we are very encouraged that this capacity could finally be coming online after [more than] 2 years of delays given our view that Satellite consumer broadband demand significantly outstrips supply, and that this will allow for SATS to meaningfully grow subscribers after capacity delays have caused subscriber trimming since early 2020," Prentiss wrote in an investor note.

Additionally, Prentiss noted that Viasat ( VSAT ) has a "hole," as it is experiencing problems with antenna deployment on its Viasat 3-A satellite, which covers the Americas.

"We think this further supercharges the subscriber opportunity for SATS, as it will now be the only player bringing significant new satellite capacity online, and we think SATS could have open season once J3 goes into service," Prentiss explained.

Lastly, Prentiss said that EchoStar ( SATS ) could benefit if DISH Network ( DISH ) and EchoStar merge as both companies are controlled by Charlie Ergen, citing recent reports .

Analysts are mixed on EchoStar ( SATS ). It has no rating 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 SATS a HOLD .

More on EchoStar

• DISH Network sinks on report it may merge with EchoStar
• EchoStar Corporation Q1 2023 Earnings Call Transcript
• EchoStar, Maxar revise deal for satellite launch after delays

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