New Street Research analyst David Barden has raised EchoStar's price target to $165 per share, driven by the value of SpaceX's stock following its IPO. Barden estimates that EchoStar's stake in SpaceX, which amounts to approximately 262 million shares, is worth about $42.1 billion based on SpaceX's first-day trading price of $161.
This valuation implies that EchoStar's shares should be valued at $161, representing a 37% increase from their recent closing price. Currently, EchoStar's stock price reflects a valuation of only $86 per share for its SpaceX stake, which is 46% lower than SpaceX's closing price on Friday.
Following the IPO, SpaceX shares have continued to rise, increasing by 13% on Tuesday, which further supports the bullish outlook for EchoStar. Additionally, EchoStar's telecommunications operations, including its pay-TV services, continue to be a significant part of its business model.
However, New Street has adjusted the value of EchoStar's AWS-3 spectrum holdings downward due to anticipated changes in the ongoing spectrum auction, which has slightly reduced the overall estimated value of the company. The uncertainty surrounding co-founder Charlie Ergen's future investment decisions has also led to a revision of the holding company discount from 10% to 20%.
Overall, the approval of a $40 billion sale of wireless spectrum to AT&T and SpaceX, alongside the IPO, is expected to positively influence EchoStar's valuation moving forward