Why EchoStar Stock Popped Again Today
Key Points
Sentiment on the stock was still quite positive after Monday's explosive announcement.
The company made an 11-figure deal to divest spectrum licenses.
On Tuesday, EchoStar (NASDAQ: SATS) was still basking in the glow of the $19 billion spectrum license deal it signed with Elon Musk's extraterrestrial exploration company SpaceX. Investors continued to be drawn to EchoStar's star power after announcing the purchase Monday. What also helped were several positive analyst upgrades on the company's stock.
By the end of the day, EchoStar had risen again, closing the day almost 4% higher. That compared most favorably to the 0.3% increase of the bellwether S&P 500 index.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Only the beginning?
One of the more bullish adjustments from a researcher was delivered Tuesday by Deutsche Bank. The lender's analysts cranked their EchoStar price target a robust 52% higher to $102 per share from $67.
Image source: Getty Images.
Deutsche's new take was, naturally, based largely on the blockbuster deal. According to reports, the European bank calculates that the company will reap $14.4 billion after taxes from the arrangement. This is to be paid in a 50/50 mix of cash and SpaceX equity.
The pundits also speculated that this won't be the last spectrum sell-off from EchoStar. They wrote that divestments from the company's Advanced Wireless Services-3 (AWS-3) portfolio could be worth $9.9 billion. It flagged telecom giant Verizon Communications as a potential buyer, given that company's smaller collection of spectrum assets compared to rivals.
A shift might be coming
If EchoStar's SpaceX deal is indeed a harbinger of things to come, the company stands in front of significant revenue-generating opportunities. Yet the sell-off of its spectrum raises questions about its future business direction; investors should keep their ears to the ground and listen for management's comments about changes in business strategy.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.