EchoStar shares rise as UBS says SpaceX stake makes stock undervalued

EchoStar shares rose Tuesday after UBS resumed coverage of the stock with a Buy rating and a $150 price target, sending the stock up 4.2%.

The UBS upgrade reflects EchoStar's transformation from wireless operator to investment vehicle, following the company's sale of 75-80% of its spectrum portfolio for roughly $43 billion.

EchoStar is set to hold a 2% stake in SpaceX, equal to about 262 million shares, once its pending spectrum transaction closes. The deal is expected to close in November 2027 and has already received FCC approval.

UBS valued that stake at roughly $39 billion, or $110 per EchoStar share, based on the current SpaceX stock price, and at $55 billion, or $156 per share, using the firm's $210 SpaceX price target. UBS noted EchoStar was granted the SpaceX shares at a roughly $11 billion valuation before SpaceX's IPO.

The firm valued EchoStar's remaining spectrum holdings at approximately $11 billion based on recent transaction precedents. UBS said EchoStar's remaining AWS-3 holdings are the most valuable of the group given their compatibility with existing carrier infrastructure, while its 700 MHz E-Block holdings align most closely with spectrum held by AT&T and its CBRS holdings align with spectrum held by Verizon and cable operators.

Analysts believe EchoStar's TV and Hughes businesses are worth $6 billion combined (though they carry $15 billion in debt), while its Boost wireless business is worth about $2 billion.

UBS said cash proceeds of approximately $31.5 billion from EchoStar's spectrum deals with AT&T and SpaceX, before taxes, will likely be used to repay debt and fund potential future investments in the telecom, aerospace and defense industries.