Some Upside to Dish from Higher HD Margins and Penetration
Dish Network (NASDAQ:DISH) competes with DirecTV (NASDAQ:DTV),Comcast (NASDAQ:CMCSA), and Time Warner Cable (NYSE:TWC) in the pay TV market. We currently have a Trefis price estimate of around $27 for Dish Network’s stock, about 33% above the current market price of close to $20.
Trefis members have created forecasts for two key drivers of Dish Network’s stock over the last week: (1) HD Broadcast Gross Profit Margin and (2) HD Penetration. The members’ forecasts suggest that HD Broadcast Gross Profit Margin as well as HD Penetration will trend higher than the Trefis forecast. These projections suggest a combined upside of around 2% of Dish’s stock.
We estimate that HD Service constitutes around 7% of the $27 Trefis price estimate of Dish’s stock. Hence the stock is not significantly impacted by (1) HD Broadcast Gross Profit Margin and (2) HD Penetration. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.
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1. HD Broadcast Gross Profit Margin
The average of forecasts for HD Broadcast Gross Profit Margin created by Trefis members indicated a projected increase from around 47% in 2010 to 51% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from around 45% in 2010 to around 48% by the end of the Trefis forecast period. The member estimates imply an upside of 1% to the Trefis price estimate for Dish Network’s stock. In the past, HD Broadcast Gross Profit Margin has decreased from 54% in 2006 to around 46% in 2009.
You can drag the forecast trend-line above to express your own view, and see the sensitivity of Dish Network’s stock to HD Broadcast Gross Profit Margin.
Our complete analysis for HD Broadcast Gross Profit Margin is here.
The average of forecasts for HD Penetration created by Trefis members indicated a projected increase from 30% in 2010 to around 62% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from around 27% in 2010 to around 55% by the end of the Trefis forecast period. The member estimates imply an upside of 1% to the Trefis price estimate for Dish Network’s stock. In the past, HD Penetration has increased from close to 3% in 2006 to around 19% in 2009.
You can drag the forecast trend-line above to express your own view, and see the sensitivity of Dish Network’s stock to HD Penetration.