Could Dish Network’s Stock Gain 50% Post COVID-19?

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Comparing the trend in Dish Network’s (NASDAQ: DISH) stock over recent months with its trajectory during and after the Great Recession of 2008, we believe that the stock could potentially gain close to 45%-50% once fears surrounding the coronavirus outbreak are abated. Our conclusion is based on our detailed comparison of Dish Network’s performance vis-à-vis the S&P 500 in our interactive dashboard analysis 2008 vs. 2020 Crisis Comparison: How Did DISH Network Stock Fare During Coronavirus Crisis Compared to S&P 500?

The World Health Organization (WHO) declared a global health emergency at the end of January in light of the coronavirus spread. Between January 31st and April 27th, Dish’s stock has lost about 35% of its value (vs. about 11% decline in the S&P 500). A bulk of the decline came after February 20th, when an increasing number of Coronavirus cases outside China fueled concerns of a global economic slowdown. However, the stock partially recovered over the last few weeks after the US stimulus package announcements.

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Sell-Off Seen In DISH’s Stock

Dish Network, the fourth largest Pay-TV provider in the US, saw a major sell-off in its stock in 2020. The company’s revenues have been continuously declining over the last 3 years mainly due to consumers shifting toward streaming platforms. With almost all major cities being locked down due to the spread of coronavirus, there has been a slowdown in economic and industrial activity. Home confinement has led to a further increase in demand for streaming services, with subscribers for streaming giants such as Netflix and Disney seeing a sharp rise, at the cost of traditional TV service players such as Dish Network. We believe Dish Network’s Q1 results will confirm this reality with a major hit to its revenue, coupled with lower guidance for Q2 and full year 2020.

Performance During 2008 Downturn

We see Dish Network’s stock decreased from levels of around $47 in October 2007 (the pre-crisis peak) to roughly $10 in March 2009 (as the markets bottomed out) – implying that the stock lost about 79% of its value from its approximate pre-crisis peak. This marked a larger drop in contrast to the broader S&P, which fell by about 51%. However, Dish Network’s stock increased at a faster rate post the 2008 crisis to about $19 in early 2010 – rising by over 90% between March 2009 and January 2010. In comparison, the S&P bounced back by about 48% over the same period.

Will DISH’s Stock Rise Similarly After Current Crisis?

Dish Network’s stock outperformed the market post the 2008 crisis, with the decline in the stock also being higher than the broader market through the crisis. Keeping in mind the fact that Dish Network’s stock has seen a lower decline of 40% this time around compared to the 79% decline during the 2008 recession, we believe it could potentially increase by close to 45%-50% to levels of around $35 per share once economic conditions begin to show signs of improvement. This marks a partial recovery to the $41 level Dish Network’s stock was at before the coronavirus outbreak gained global momentum.

In contrast to Dish Network, Comcast’s stock has outperformed the broader market during the current crisis.

Our dashboard forecasting US COVID-19 cases with cross-country comparisons analyzes expected recovery time-frames and possible spread of the virus. Further, our dashboard -28% Coronavirus crash vs. 4 Historic crashes builds a more complete macro picture. The complete set of coronavirus impact and timing analyses is available here.

 

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