SG Cowen Keeps 'Strong Buy' on EchoStar
SG Cowen cut its estimates, but keeps the strong buy rating on Echostar Communications (DISH ).
Analyst Tom Watts says EchoStar's financial results reflected lower-than-expected net additions, much lower average revenue per user, and higher churn. EchoStar posted 285,000 net additions, below his $295,000 estimate; this is a surprise in light of cable's negative-to-flat basic subscriber additions in the third quarter, although he thinks some of DirecTV's 326,000 subscribers could have come from EchoStar.
Watts says the average revenue per user difference ($50.70, vs. his $51.70 estimate) is due to a rise in the amount of free and discounted programming. He cut the 60 cents 2003 earnings per share estimate to 53 cents, cut the $1.15 2004 estimate to $1.08, and cut the $1.78 2005 estimate to $1.70. Watts says fundamentals are intact, and he looks for positive information during a Tuesday afternoon conference call.