EchoStar (ECHO): Hidden Opportunity...SPCX on Sale & Spectrum for Free; Assume at Overweight

While complex, the market-implied discount applied to ECHO shares is too wide, in our view. We see an attractive entry point to get access to SPCX at a discount and view ECHO as one of the few publicly traded ways to play spectrum, which we view as a scarce & appreciating asset class. Assume at Overweight with a $134 price target (+44% upside), reflecting the market value of the remaining spectrum (~$7.6bn after-tax) and total consideration expected to be received in '27 from the spectrum sale to SpaceX, including $8.5bn of cash and ~262mn SpaceX shares (~$39bn pre-tax value at ~$150). We also incorporate ~$10bn of value from EchoStar's Pay-TV, Wireless, and Broadband & Satellite Services businesses, and apply a 30% HoldCo discount. Our $260 bull case assumes $300 per SpaceX share, and our $61 bear case assumes $75 per SpaceX share with a 50% HoldCo discount. We assume EchoStar will defer most spectrum-sale taxes via a 1033 exchange, and expect cash to build to ~$18bn by YE27.