Deutsche Bank is positive on Echostar (NASDAQ:DISH) saying they believe the shares are oversold on churn concerns related to its 3Q07 performance, which they believe will normalize faster than many investors are expecting. Also, the DBS sector continues to hold up well in the face of cable's triple-play and scaling RBOC video. Lastly, the EHC spin should highlight value and reduce capital intensity.
DISH expects to complete the tax-free spin-off of Echostar Holding Corp to shareholders on January 2nd, to trade under SATS on the Nasdaq (0.20 shares per DISH share). This essentially separates from DISH the engineering group (700 engineers) and the excess satellite capacity (9 sats plus 5 more being built, plus excess FCC satellite licenses), along with $1.531b of cash.
DISH is trading on '08E at 6.1x EBITDA, 15.1x P/FCF and 14.5x P/E. DB's $55 DCF-driven target price will become $53 post EHC spin given the cash being distributed. Reiterates Buy.
Notablecalls: I believe DISH is a bounce play here. The stock has been weak ahead of the spin news as the players betting on the buyout have been washed out. The valuation looks reasonable and as DB's Douglas Mitchelson notes, essentially, non-productive but capital intensive assets are being spun-off, which has little impact on cash flow but is accretive to earnings.
I very much like DISH here as a bounce play.
DISH expects to complete the tax-free spin-off of Echostar Holding Corp to shareholders on January 2nd, to trade under SATS on the Nasdaq (0.20 shares per DISH share). This essentially separates from DISH the engineering group (700 engineers) and the excess satellite capacity (9 sats plus 5 more being built, plus excess FCC satellite licenses), along with $1.531b of cash.
DISH is trading on '08E at 6.1x EBITDA, 15.1x P/FCF and 14.5x P/E. DB's $55 DCF-driven target price will become $53 post EHC spin given the cash being distributed. Reiterates Buy.
Notablecalls: I believe DISH is a bounce play here. The stock has been weak ahead of the spin news as the players betting on the buyout have been washed out. The valuation looks reasonable and as DB's Douglas Mitchelson notes, essentially, non-productive but capital intensive assets are being spun-off, which has little impact on cash flow but is accretive to earnings.
I very much like DISH here as a bounce play.
No comments:
Post a Comment