EchoStar’s SpaceX Stake Is Driving UBS, Citi Price Target Revisions

UBS lowered EchoStar’s price target to $125 from $128 while Citi raised the firm’s price target to $111 from $87, according to TheFly.

• UBS cited Echostar’s pivot from a wireless operator to an investment company after its spectrum portfolio sales as a reason for a valuation change. 
• UBS also noted that EchoStar’s approximately 3% SpaceX stake represented a significant upside for the company. 
• Citi said that SpaceX’s potential $800 billion valuation could double the pre-tax cost basis of EchoStar’s stake.

EchoStar Corp. (SATS) shares were in focus on Tuesday after the company received two price target updates from UBS and Citi, both of which underscored the impact of its SpaceX stake.

UBS lowered EchoStar’s price target to $125 from $128 while maintaining a ‘Neutral’ rating on the shares, according to TheFly. And in a separate note, Citi raised EchoStar’s price target to $111 from $87 with a ‘Neutral’ rating, as seen in TheFly.

The SpaceX Impact

UBS noted that EchoStar’s pivot from a wireless operator to an investment company after the sale of about 75%-80% of its spectrum portfolio for roughly $43 billion warranted a valuation shift. UBS assigned $11B to the remaining spectrum based on precedents, resulting in the revised price target.

However, the firm added that the company’s 3% SpaceX stake, now implied at about $22B or roughly $65 per share assuming an $800 billion valuation, represented a significant upside versus prior marks.

Meanwhile, Citi analyst Michael Rollins hiked EchoStar’s price target, citing recent reports that SpaceX’s upcoming public listing at an allegedly $800B could double the pre-tax value of the cost basis for its SpaceX shares that it would receive after its pending spectrum sales.

Spectrum Deals

In September, EchoStar agreed to sell its AWS-4 and H-block spectrum licenses to SpaceX in a $17 billion cash-and-stock deal that would give the satellite company up to $8.5 billion in SpaceX stock. Some media reports have also suggested that SpaceX may go public through a reverse merger with Echostar.

Apart from the SpaceX deal, EchoStar also agreed to sell about $23 billion worth of low-band and mid-band wireless spectrum to AT&T in August. Together, the deals shift EchoStar’s long-term focus away from direct-to-device satellite constellations.

How Are Stocktwits Users Reacting?

On Stocktwits, retail sentiment around EchoStar shares slid into the ‘bearish’ territory from ‘neutral’ a day ago, while message volume declined to ‘normal’ from ‘high’ levels at the time of writing.

Meanwhile, retail sentiment for SpaceX slipped into the ‘neutral’ territory from ‘bullish’ a day ago, while message volume remained at ‘high’ levels.

Shares of EchoStar are up over 378% in the past year.

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