Why Did Dish Network Stock Fall 8.7%?

Dish Network stock (DISH) lost 8.7% on Tuesday and closed at $34.95. The stock fell after an analyst slashed the stock’s rating. On Monday, Barclays analyst Kannan Venkateshwar downgraded Dish to “underweight” from “equal weight” with a target price of $31. The target price reflects a potential downside of 11.3% from the company’s closing price of $34.95 on Tuesday. According to the CNBC report, “The Sprint and T-Mobile deal is unlikely to create major upside for Dish equity holders.”

As of Tuesday, Dish stock has risen 40.0% year-to-date and 14.1% in the last 12 months. The stock is trading 50.5% above its 52-week low of $23.22 and 21.7% below its 52-week high of $44.65. While Dish’s stock performance has been impressive this year, the stock has fallen 25.6% in the last three years and 38.9% in the last five years.

Dish Network reported its second-quarter earnings after the markets closed on Monday. The company’s net revenues fell 7.2% YoY (year-over-year) to $3.21 billion in the second quarter, which beat analysts’ expectation of $3.14 billion. Notably, the company’s sales have been falling on a YoY basis for 11 consecutive quarters. Dish Network’s second-quarter adjusted EPS fell 27.7% YoY to $0.60, which missed analysts’ estimate of $0.65.

Dish Network reported net losses of 31,000 pay-TV customers in the second quarter. The company’s net losses were lower than its net losses of 151,000 in the second quarter of 2018. Analysts expected net losses of 252,000 pay-TV customers in the second quarter.

As of Tuesday, according to a Reuters survey of 19 investment research firms covering Dish Network stock, seven analysts recommended a “buy,” eight recommended a “hold,” and four recommended a “sell.” On average, analysts have given the stock a 12-month target price of $47.17, which implies a rise of 35.0% from its closing price of $34.95 on Tuesday. The stock’s median target price is $33.50.

Currently, Dish Network stock trades at 15.47x its 2019 estimated adjusted EPS of $2.47 and at 19.51x its 2020 estimated adjusted EPS of $1.96. Analysts expect the company’s adjusted EPS to fall  17.7% this year and 20.6% in 2020. They expect the company’s earnings to fall 26.04% compounded annually in the next five years.