Subscriber Weakness Could Continue At DISH Network, Guggenheim Says

The revised first-quarter estimates for DISH Network Corp DISH reflect higher subscriber-related revenue, along with an increase in subscriber acquisition costs and capex, according to Guggenheim.

The Analyst

Guggenheim’s Mike McCormack maintains a Buy rating on DISH Network, with an unchanged price target of $48.

The Thesis

DISH Network released a mixed fourth-quarter earnings report Wednesday morning. The earnings call with DISH Network’s management confirmed subscriber weakness. McCormack said the situation was worsened by the company’s ongoing dispute with HBO, which is owned by AT&T Inc. T, as well as the Univision impact.

Management warned of the lack of any meaningful improvement in contract negotiations, adding that the forthcoming "Game of Thrones" release could result in further subscriber losses.

DISH Network believes the Narrowband Internet of Things build will satisfy requirements, although its network plans may be affected in the near term by uncertainty around the designated entity issue and other spectrum constraints.

McCormack raised the total revenue estimate for the first quarter to $3.23 billion, reflecting higher subscriber-related revenue. However, the analyst lowered the EBITDA and EPS estimates for the quarter by 1.6 percent to $669 million and by 2.6 percent to 71 cents, respectively, to reflect higher subscriber acquisition costs. The capex estimate was raised by 2.7 percent.

Price Action

Shares of DISH Network plummeted almost 8 percent to $28.86 Wednesday.

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