EchoStar $SATS ( ▲ 3.2% ) jumped more than 7 percent on Wednesday after analysts said the company could be one of the biggest winners if SpaceX goes public next year. The move follows multiple reports that Elon Musk’s SpaceX is lining up an IPO, instantly putting anything connected to the rocket maker under a brighter spotlight.
Morgan Stanley upgraded EchoStar to overweight from equal weight and lifted its price target to 110 dollars from 82 dollars. The bullish call centers on one thing: EchoStar already owns a sizable pile of SpaceX stock thanks to two major spectrum deals. In September, the company agreed to a 17 billion dollar transaction split evenly between cash and SpaceX shares, and it followed up in November by selling more spectrum rights to SpaceX for an additional 2.7 billion dollars in stock.
If SpaceX lists at a massive valuation, EchoStar’s stake could become a jackpot. Morgan Stanley noted that EchoStar is receiving its SpaceX shares at 212 dollars each. Every 100 dollar move in SpaceX stock translates into roughly 18 dollars of value for SATS, or about 20 percent of its equity. If SpaceX indeed prices north of 400 dollars per share, the bank’s bull case for EchoStar jumps to 150 dollars.
EchoStar’s story this year has already been wild. The stock is up more than 330 percent as the company pivots from operating Dish Network and Boost Mobile to monetizing its spectrum portfolio. That shift has attracted interest from telecom players hungry for scarce wireless capacity. In August, EchoStar sold spectrum rights to AT&T $T ( ▼ 0.78% ) for 23 billion dollars, sending shares soaring 70 percent in a single day.
Morgan Stanley said the demand is far from over. The analysts expect Verizon $VZ ( ▼ 1.11% ) and T-Mobile $TMUS ( ▼ 1.24% ) to remain aggressive buyers, calling spectrum an appreciating asset in an industry where bidders rarely show restraint.
EchoStar’s future, it seems, is now tied to two powerful forces: the rising value of airwaves and the market’s appetite for a SpaceX IPO.