Will This Downgrade Hurt Dish Network (DISH) Today? (Update)

Update (9:40 a.m.): Updated with Friday market open information.

NEW YORK (TheStreet) -- Citigroup downgraded Dish Network (DISH) to "neutral" from "buy" and cited valuation as the reason for the downgrade.

The stock was falling 2.85% to $56.66 shortly after the market opened on Friday.

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Separately, TheStreet Ratings team rates DISH NETWORK CORP as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate DISH NETWORK CORP (DISH) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 298.7% when compared to the same quarter one year prior, rising from -$158.46 million to $314.91 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 2.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • DISH NETWORK CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DISH NETWORK CORP reported lower earnings of $1.41 versus $3.38 in the prior year. This year, the market expects an improvement in earnings ($1.53 versus $1.41).
  • The debt-to-equity ratio is very high at 20.13 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.86, which shows the ability to cover short-term cash needs.
  • Net operating cash flow has decreased to $401.05 million or 41.53% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: DISH Ratings Report

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