UPDATE: Raymond James Downgrades Echostar Holdings (SATS) to Outperform

Raymond James analyst Ric Prentiss downgraded Echostar Holdings (NASDAQ: SATS) from Strong Buy to Outperform with a price target of $27.00 (from $57.00).

The analyst comments "We are downgrading EchoStar to Outperform, from Strong Buy, and lowering target price to $27, from $57, as we still see dramatic upside versus the current price in the long-term, but not a nearterm catalyst to drive stock performance or squeeze the shorts. The company gave additional color on its three strategic horizons under new CEO Hamid Akhavan including possible S-Band monetization opportunities, and the framework seems sound, but any material upside from such plans is likely well over a year away. In the meantime, demand for consumer broadband remains strong, and EchoStar continues to manage limited capacity and costs to maximize yield ahead of the Jupiter 3 (J3) satellite launching (2Q23) and going into service (RJE 3Q23), when it should resume growing subscribers, revenues, EBITDA and Free Cash Flow, which is part of why we remain positive on the name for more patient investors. But for now, subscriber numbers will be weak, and capex and opex will precede revenue growth. In addition, stock buybacks were lower in the 3Q22 at just $11M (0.6M shares at ~$19/share) after doing $377M from 4Q20-2Q22, and the company said it is not active in the market as it eyes larger ultimate growth opportunities, along with maintaining cash in the current macro setting. While these initiatives could be interesting, it removes one of the short-term catalysts. All in all, we believe the valuation (a shockingly low <3x EV/EBITDA) remains an attractive entry point with limited downside, especially considering $1.6B in cash and negative net debt, but see greater near-term potential returns elsewhere."

For an analyst ratings summary and ratings history on Echostar Holdings click here. For more ratings news on Echostar Holdings click here.

Shares of Echostar Holdings closed at $17.11 yesterday.

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