Analyst Takes Aim at Bears in DISH (DISH), Lays Waste to 5 Negative Assumptions

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In an attempt to aggressively slam the door on bears, Wells Fargo's Marci Ryvicker pounded the table on her bull thesis for DISH Network (Nasdaq: DISH) Tuesday morning. Investors are cheering the analyst's conviction: DISH shares are up 5.5 percent heading into the afternoon trading session.

Despite a recent 11 percent bounce in the stock over just the last three trading sessions, bears in DISH are still winning. Even with this morning's move higher, shares of DISH are down more than 13 percent since the 52-week high set at the beginning of April.

Ryvicker said her note comes in response to "numerous calls from investors worried about one thing or another on DISH." Whatever the fears -- new or old -- the analyst said the bottom line in DISH is the stock "is trading 36% below its 'floor' price..."

Ryvicker laid out the following bear cases and quickly put them to rest:

• Charlie Ergen will spend billions of dollars building a wireless network on his own - the analyst sifted through "every single earnings transcript since Q4 2010" with no evidence of such claims. Although Ergen has mentioned a solo wireless build, this would only be as a last resort. Ryvicker insists Ergen prefers a partnership with limited capital investment.
  
  
• The spectrum screen prevents AT&T (NYSE: T) from potentially acquiring DISH's spectrum - "The spectrum screen is flexible in that it tends to move with the DENOMINATOR -- which is the amount of spectrum that is currently 'made available.'" While DISH's 40MHz spectrum is not "available," Ryvicker believes once it is, "any combination with DISH and a large wireless carrier is STILL well below the required cap."
  
  
• The spectrum will not be sold and therefore should not be considered "hidden value" - DISH's spectrum is "NOT part of DISH’s core business so either a) it should be considered hidden value or b) DISH’s terminal value on the core business should be adjusted to incorporate a different business model. Either way, we see a $37.65 floor."
  
  
• The spectrum is not worth more than its cost - NPRM and/or Spectrum Co can be used as evidence to why this statement is untrue. "Even in this draconian 'cost' scenario, the stock is likely worth mid to high $30's."
  
  
• It is a foregone conclusion that Charlie has no leverage in the Voom case due to NY tort law and therefore DISH shareholders will inevitably lose $5-6/share in equity value - Ergen would not need to put down $2.5 billion in cash right away, suggesting "no risk to investment in the core business and no loss
  of 'leverage.'"

Even with a nearly 13 percent reduction in the analyst's fair value estimate for DISH shares (from $54-$56 to $47-$49), Ryvicker noted her target still provides about 73 percent upside versus Monday's closing price.

Needless to say, Ryvicker reiterated her Outperform rating on DISH shares.

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