Things should have been brighter for Dish Network (NASDAQ:DISH) than they were in recent months. After all, a pandemic that keeps people in their homes for long periods of time should be tailor-made for a company that provides home entertainment. With an array of competitors on every front and people moving away from cable, though, it's been an uphill fight. Recent news gave Dish Network new life as it went up 11% at one point—and managed to preserve these gains into this morning—on the latest news about an exciting new project.
The Project that Got Dish Network's Groove Back
What was the project that shot 11% into the arm of a cable company that should be dying everywhere except possible places where you can't get the right kind of internet for streaming video? The answer is a new connection with Amazon (NASDAQ:AMZN), and a new partnership that calls for Dish to tap Amazon Web Services to roll out a complete 5G network on Dish's infrastructure.
With such a plan in place, Dish Network effectively throws its hat into the ring alongside the likes of Verizon (NYSE:VZ), AT&T (NYSE:T) and T-Mobile (NASDAQ:TMUS). By connecting with Amazon, Dish Network now has the chance to build a complete 5G network, from scratch, that can actually improve on its competitors' efforts to do just that. With such a partnership in place, Dish can make a move toward providing service before summer 2023; Dish, at last report, runs the risk of losing wireless spectrum licenses if it doesn't have an operational network by then.
The good news for Dish is that it should have at least a test case ready by the end of 2021. A statement from the company revealed that it would have “...the first standalone, cloud-based 5G Open Radio Access Network in the United States” in Las Vegas starting at some point this year. Further, the statement noted that Amazon and Dish would be working together to see how organizations use 5G, or build networks themselves.
Analysts Swinging Back to Buy
The latest moves made at Dish Network have not been lost on the broader analyst pool, as noted by our latest research. In fact, in the last month, the consensus has swung around to “buy”, trending steadily upward to bullish.
Ratios have always been mixed for Dish, and looking at a year's worth of ratings proves that point nicely. A year ago, the company had one “strong buy” rating, three “buy” ratings, seven “hold” and two “sell.” Six months ago, that shifted a bit more to bullish as we had one “strong buy”, three “buy”, eight “hold” and one “sell.” Three months ago, another shift to bullish emerged as we went to one “strong buy”, four “buy”, eight “hold” and one “sell.” Today, the sell side has departed the field altogether, and we stand at one “strong buy”, four “buy”, and seven “hold” for the first move to “buy” after months of “hold” consensus.
The price target, meanwhile, occupies a surprisingly broad range. The average price target sits at $40.33 per share, with a low of $30 and a high of $65. However, some of these price targets are comparatively old, so it's a point to keep in mind. Recently, Morgan Stanley raised its target from $32 to $38, and Raymond James, about seven weeks prior, dropped its target from $55 to $54, while maintaining a “strong buy” rating.
But What About Tesla?
On the surface, this is a great move for Dish Network. If it can actually roll out a nationwide 5G network that reaches the same people that Dish Network television reaches right now, it will have a formidable value proposition on its hands. Better yet, if it can roll out 5G without a lot of access limits or throttling speeds or any other such issues, it could be the biggest thing to hit the entire concept of the digital divide since wireless internet access in the first place.
There's one point that isn't being too widely considered, though, and that comes from electric car maker Tesla (NASDAQ:TSLA). Tesla has been hard at work producing the Starlink system, a series of satellites in low Earth orbit—which is actually a step up from the standard satellite internet connection that turns to geosynchronous satellites—that connect to ground transceivers and give just about anybody access to unlimited data at impressive speeds. Though the Starlink system is in beta right now—some places already have access, and more are expected to have access by the end of this year—it's already said to be producing speeds starting at 50Mb/s, which compares at least somewhat to the average 100Mb/s rate 5G offers.
Still, Tesla's advantage on that front is it's available now, or will be soon, while Dish will still be trying to get the system operational two years from now. While there may still be room for Dish to gain customers, especially on the strength of better speeds, Tesla will likely have a first-mover advantage to work to improve its own offering, not to mention the resources to do it. Dish's Amazon backing certainly will help matters there, but Dish will be playing catchup for the foreseeable future. Still, with Dish's name recognition and Amazon's know-how, it could be an exciting play for investors that's a lot more accessible than a share of Tesla right now.
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