Shares of satellite television service provider, Dish Network (DISH), fell more than 19% after the company reported poor Q1 2022 results. DISH also operates the streaming video platform Sling TV and offers wireless phone service.
1Q Earnings Numbers
Revenue dropped to $4.33 billion from $4.5 billion for the same quarter last year and fell short of the consensus estimate of $4.38 billion. Earnings per share (EPS) of $0.68 declined from $0.99 a year ago and missed the consensus estimate of $0.74.
Dish’s flagship pay-TV business continued to struggle, losing 462,000 subscribers. The streaming service Sling TV also lost 234,000 subscribers. Dish also suffered a customer loss in its wireless phone business, with 343,000 subscribers cancelling the service. The disagreement with T-Mobile (TMUS) that led to the 3G network shutdown also contributed to the wireless subscriber loss. Dish entered the wireless phone market through a deal with T-Mobile.
What Lies Ahead for Dish?
Further weighing down Dish stock was the disclosure that the company’s free cash flow turned negative in Q1. The management attributed that to the increased investment in the wireless network. However, the management remains upbeat about the future.
Dish CEO, Erik Carlson, said, “Look, we had a tough quarter, but we’re optimistic that we can leverage the platform, our messaging, high-value products, and great experience to reach customers who overall video content bills are too high, but still want the excitement of live TV.”
Wall Street’s Take
On May 6, Pivotal Research analyst Jeffrey Wlodarczak maintained a Buy rating on Dish Network with a price target of $40, which indicates 80%.
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating, which is based on six Buys versus three Holds. The average Dish price target of $41.88 implies 88.5% upside potential to current levels. Shares have declined 33% year-to-date.
TipRanks data shows that financial blogger opinions are 100% Bullish on DISH, compared to a sector average of 68%.
Key Takeaway for Investors
The future of the traditional pay-TV business generally looks bleak with Americans continuing to cut the cord. However, there is great opportunity for Dish’s streaming platform, Sling TV, and wireless phone service. In the wireless business, Dish could benefit from the growing demand for mobile broadband, thanks to trends such as remote work.
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