DISH: Merrill Backs Off Bearish Stance; Sees Business Stabilizing

Dish Network (DISH) shares are trading higher today after Bank of America/Merrill Lynch analyst Jessica Reif Cohen lifted her rating on the stock to Neutral from Underperform, while lifting her price target on the stock to $21, from $16. The stock closed Friday at $17.40.

Cohen offers four reasons for the upgrade:

• There signs business is beginning to stabilize, with positive subscriber adds in Q2.


• Churn improvement should continue over intermediate term.


• New $24.99 promotion is bringing in superior subs to prior $9.99 promotion.


• DISH has the lowest EV/EBITDA in the pay TV peer group at 3.5x 2010 estimates EBITDA.

All that said, she also gave a list of reasons that she didn’t go to a Buy rating:

• Potentially rocky path to stability.


• Clearer capital allocation strategy and potential catalysts at rival DirecTV (DTV).


• With most pay TV stocks cheap, she would rather be long cable stocks.

DISH today nonetheless is up 50 cents, or 2.9%, to $17.90.