Dish Network (NASDAQ:DISH) shares rose on Tuesday after UBS upgraded the satellite TV provider, noting its spectrum is "undervalued," though there are questions about the company's wireless business model.
Analyst John Hodulik raised the rating to buy from neutral and put a $44 price target on the stock, noting that it has an "attractive risk/reward" and some long-term potential for its next-generation, cloud-based 5G wireless network, along with its spectrum.
Hodulik noted that based on recent auctions, Dish Networks (DISH) 150 MHz of sub-G GHz, which are largely mid-band spectrum is "undervalued" at the current share price and may be worth more than share price itself.
"Conditions prevent incumbents from buying DISH airwaves pre-2026, but we believe the spectrum should appreciate in value over this time and nothing precludes interest from cable or tech. 5G (~3x 4G usage) & FWA (~30x 4G usage) should drive carrier demand for spectrum & provide another incentive for cable to get involved, in our view," Hodulik wrote.
Dish Network (DISH) shares were up more than 5% to $31.24 in early trading on Tuesday.
"Questions remain regarding DISH's wireless business model, but we believe DISH's network build protects the company's spectrum licenses, whose value serves as a backstop," Hodulik added.
In addition, Hodulik noted that the Dish Network (DISH) analyst day, to be held in May, could show "proof of concept" for its network build and how it's likely to monetize it.
The analyst also noted that the deployment delay of Dish's (DISH) 5G network has weighed on sentiment, but that could be removed at the analyst day, as more than 100 markets are expected to launch by June.
In addition, there could be consolidation in the pay TV/satellite market, with Dish (DISH) Chairman Charlie Ergen recently saying a combination with DirecTV would be "inevitable."