Buy this stock that offers discounted exposure to SpaceX, Morgan Stanley says
EchoStar, which has a multi-billion partnership with SpaceX, is poised to rally after its recent pullback, Morgan Stanley says.
TL;DR
- Morgan Stanley initiated coverage of EchoStar with an 'overweight' rating and a $134 price target, suggesting a 44% upside.
- The bank believes EchoStar offers exposure to SpaceX at a compelling discount and views it as a way to play the scarce asset class of spectrum.
- EchoStar has an agreement to grant wireless spectrum licenses to SpaceX, allowing Starlink to serve Boost Mobile subscribers.
- Despite a 17% stock drop post-SpaceX IPO, Morgan Stanley states the discount to EchoStar's intrinsic value is too wide to ignore.
- The analyst notes EchoStar can act as an idiosyncratic hedge on the U.S. wireless market and offers call options on potential mergers involving Dish, Sling TV, and DirecTV.