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DISH Network Slips to a 52-Week Low: What’s Taking It Down?

Zacks

Shares of satellite-TV operator DISH Network Corp DISH have tumbled to a 52-week low of $51.63 during the trading session on Oct 9. However, the figure recovered marginally to close at $51.68, down 3.09%.

Over the past 52 weeks, shares of DISH Network have ranged from a low of $51.63 to a high of $66.50. Average volume of shares traded over the last three months is approximately 1.9 million.

Why the Downturn?

DISH Network continues to struggle with the persistent loss of subscribers due to cord-cutting. In the last reported second-quarter 2017, DISH Network lost 196,000 pay-TV subscribers compared with a loss of 281,000 in the year-ago quarter. Moreover, the company lost 46,000 broadband subscribers in the reported quarter compared with a loss of 15,000 in the year-ago quarter. This trajectory of subscriber losses in pay TV continues to signify an unprecedented annual decline.


Over the last 3-4 years, the internal dynamics of the U.S. pay-TV industry have been gradually shifting from cable-TV operators to large telecom operators and low-cost over-the-top service providers. Extensive network of fiber-based video services from telecom operators and the strong presence of online video streaming providers such as Netflix Inc NFLX, Hulu.com, YouTube etc., have become a severe threat to cable-TV operators because of their extremely cheap source of TV programming.

Also, DISH Network faces intense competition in the pay-tv market from players like AT&T Inc T, Comcast Corp CMCSA and Charter Communications Inc CHTR.

Meanwhile, DISH Network’s top-line growth remains under pressure due to its failure to strike any deal with wireless operators to deploy a nationwide wireless network. The company might be affected after failing to renew long-term programming contracts on favorable pricing and other economic terms. Also, escalating programming and content expenses and retransmission fees may impede the company’s margins.

Additionally, penalty of $280 million by the U.S. District Judge of the Central Illinois District, Sue Myerscough, in a telemarketing lawsuit was a major setback. This was possibly the biggest judgment ever related with such a case. We expect DISH Network to quickly resolve all such disputes and focus on growth-based strategies.

We believe that stiff pricing competition, stringent regulatory norms along with anti-competitive and unfair business practices charges are reasons behind the decrease in the company’s share price

Price Performance

The price performance of DISH Network fails to impress. Over the past three months, shares of DISH Network have declined 20.2% as against the industry’s gain of 2.2%.



Estimates on the Downswing

We note that the sales and earnings per share (EPS) estimates for DISH Network has moved down for the remaining quarters of 2017 and also for full-year 2017.

Sales growth for third-quarter 2017 and fourth-quarter 2017 is estimated to decelerate 4.1% and 4.6%, respectively. For 2017, sales are expected to drop 4.2%.

EPS growth for third-quarter 2017 and fourth-quarter 2017 is estimated to decelerate 4.8% and 13.9%, respectively. For fiscal 2017, EPS is expected to drop 32.2%.

The downward estimate revisions reflect pessimism over the prospects of this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Certainly Not a Broker’s Favorite

Given the challenges faced by the company, the stock is not a favorite pick for brokers right now.

Over the last 90 days, the Zacks Consensus Estimate for third-quarter 2017 and fourth-quarter 2017 earnings has gone down 1.6% to 61 cents per share and 4.8% to 60 cents, respectively. Likewise, the Zacks Consensus Estimate for 2017 has plummeted 69 cents to $2.07 per share.

Given the wealth of information at the disposal of brokers, it is in the best interest of investors to be guided by broker’s advice and the direction of their estimate revisions. Notably, the direction of estimate revisions serves as an important pointer when it comes to the price of a stock.

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