JPMorgan Downgrades Echostar Holdings (SATS) to Underweight 'on Leverage/Funding Concerns and Still Ramping Wireless Efforts'

JPMorgan analyst Philip Cusick downgraded Echostar Holdings (NASDAQ: SATS) from Neutral to Underweight with a price target of $12.00.

The analyst comments "We downgrade EchoStar to Underweight (from Neutral) due to 1) leverage/funding concerns, 2) increased opex/capex related to wireless ramp, and 3) continued pressure in the company’s core legacy businesses (PayTV and Broadband). SATS reported mixed 2Q results, with better PayTV KPIs and wireless subs but weaker wireless financials. We are encouraged by management’s renewed focus on execution, cost takeout efforts, and improvements in retail wireless sub growth (including the recent rebrand). In that regard, ex-ACP disconnects SATS would have added 32k retail wireless subs in 3Q. While we expect the trend of underlying (ex-ACP) net adds to persist in 2H24, further scaling sub growth will likely burden an already stretched balance due to increased opex (sales/marketing) and capex (deployment of additional cell sites to complete its network build) - consistent with COO Swieringa commentary on 2Q call last week. SATS’ funding remains the key focus with company engaging in constructive discussions with counterparties (at all levels of the cap structure) to fund its November maturity: we believe the company will be able to raise funding ahead of the maturity, likely spectrum-backed, but addressing further maturity walls (ex. ‘25/’26) seems more complicated. While funding could remove near-term bankruptcy risk, we are uncertain that any financing arrangement would be beneficial to equity holders. We establish a Dec‘25 price target of $12 (vs our prior Dec’24 price target of $12)."

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 $16.76 yesterday.

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