Dish Network (DISH) stock is showing signs of recovery from a sharp correction. Since reaching a year-to-date high of $43.26 on July 23, the stock has fallen over 29%. However, it is still up year-to-date. Yesterday, Raymond James analysts upgraded DISH stock to “strong buy.” As a result, the stock rose 5.9% before markets opened.
Raymond James upgrades Dish stock
Raymond James analyst Ric Prentiss says now is an “opportune time to buy Dish.” Interestingly, this bullish outlook comes just as the company is facing strong headwinds. Business is slowing in the pay-TV sector, Dish’s core business. However, the company has revealed that it lost about 31,000 net subscribers in fiscal 2019’s second-quarter, versus 151,000 in fiscal 2018’s second quarter.
Recognizing the threat of the declining business, Dish is working on a business diversification strategy. According to Variety, Dish is “getting ready to launch into the retail wireless phone biz and invest billions in building its own 5G network.” It is this strategy that supported Prentiss’s bullish outlook for Dish. The analyst argued that even without the diversification move, Dish is still ripe for buying.
The fourth-largest wireless carrier in the US
Dish’s ascension to become the fourth-largest wireless carrier is contingent on the impending T-Mobile–Sprint merger. It faces opposition as it could violate antitrust laws. However, Dish would stand to benefit by acquiring assets from the merging companies.
Furthermore, Dish has successfully challenged the piracy of its content. On November 13, 2018, Dish won a case against SET TV, which was ordered to pay Dish $90.2 million in damages. The company is also pursuing a content piracy case against Easybox IPTV. If it wins the case, Dish could seal significant revenue leaks, boosting its net income from operations.
Ultimately, Dish seems to have won some analysts over with its ability to dodge headwinds. By entering the wireless business and launching 5G, the company could strengthen further.