If you’re looking for a way to buy SpaceX at a deep discount, take another look at EchoStar. Satellite technology company Echostar is underperforming as it continues to lose subscribers in its pay-TV and broadband businesses, and is more than 30% below its 52-week high. The company’s pay-TV subsidiary, Dish DBS, filed for Chapter 11 bankruptcy last month after deferring debt payments. Stock prices have also come under pressure following the unwinding of SpaceX’s proxy trading. Initially, the stock benefited from investors seeking exposure to the rocket maker ahead of its June IPO. But on Tuesday, two Wall Street firms reinstated their coverage of Echostar with buy ratings. Deutsche Bank has set a price target of $143, suggesting an upside of about 40% from Monday’s closing price. Citi rated the stock a “buy” and reported a price target of $126, suggesting the stock could rise 28%. ECHO 1D Mountain EchoStar, 1 Day Underpinning their bullish stance is the company’s large exposure to SpaceX, which joined the Nasdaq 100 on the strength of a buy rating from the street on Tuesday. Echostar’s $42.4 billion SpaceX stake represents about 65% of the satellite company’s total net assets, according to Deutsche Bank Research. The stock has a net asset value of $121.46 per Echostar share, compared to about $100 on Tuesday. In other words, EchoStar is trading at a 20% discount to its SpaceX stock, giving investors a cheap way to buy into Elon Musk’s rocket company. SpaceX stock traded at about $150 Tuesday. Deutsche Bank analyst Brian Kraft thinks this could boost Echostar stock. He noted that in the month since SpaceX’s IPO, Echostar stock has fallen 23%, while Elon Musk’s space company’s stock has risen 19%. “Since the SPCX IPO almost a month ago, there has been a significant divergence in the performance of SPCX and ECHO,” Kraft wrote. “This means investors not only get the rest of ECHO’s assets for free, but also buy SPCX at a 20% discount.” To be sure, Kraft said EchoStar isn’t necessarily a pure play on SpaceX. He said that even if SpaceX rose 60%, Echostar would only rise 38%, assuming the discount rate remained constant. Echostar stock was last up 2% in intraday trading. SpaceX stock fell more than 5%.
