Zacks Investment Research downgraded shares of DISH Network Corporation (DISH) from NEUTRAL to UNDERPERFORM on June 10, 2013, with a target price of $36.00.
We downgrade our recommendation on DISH Network to Underperform following its disappointing first quarter of 2013 financial results. Both the top and the bottom line fell well below the Zacks Consensus Estimate. In the reported quarter, the company's average churn rate and subscribers' acquisition costs increased substantially whereas EBITDA decreased significantly year over year. We believe that the main reason for this weak result is the highly competitive nature of the U.S. pay-TV industry. Further, DISH Network is currently restrained with several acquisition related issues. This includes Clearwire, Sprint Nextel and some wireless frequencies of LightSquared. The total size of the three proposed acquisition is over $30 billion. We believe that this huge liquidity burden will significantly worsen DISH's already leveraged balance sheet. We do not find any immediate growth catalyst for the company.
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