EchoStar Stock: Battered 5G Play Could Target 100% Return

EchoStar Corporation Operates in Potential $54-Billion Market

Satellite communications (SATCOM) technologies have strong tailwinds, driven by the global demand for bandwidth.

It’s estimated that the SATCOM equipment market will jump to $53.7 billion by 2026, growing at a compound annual growth rate (CAGR) of 19.6%. (Source: “Satellite Communication (SATCOM) Equipment Market by Solution (Products and Services),” Markets and Markets Research Private Ltd., last accessed January 17, 2022.)

With the adoption of 5G technology expected to accelerate, this creates incredible opportunities for SATCOM companies like EchoStar Corporation (NASDAQ:SATS), which provides satellite communication solutions.

Trading around 20% below its 52-week high, I like the risk/reward opportunity with SATS stock.

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The developer of SATCOM solutions via an extensive satellite network is well positioned in the communications space, especially with 5G being a major focus.

Great Contrarian Set-Up for SATS Stock

A look at EchoStar Corporation’s 15-year stock chart shows its shares making strong upward moves since trading below $12.50 in 2009. The subsequent years were characterized by a strong multi-year rally by EchoStar stock to $50.63 in June 2017, prior to a breakdown at channel support in 2018.

Since its peak, SATS stock has drifted lower, failing to generate any sustainable rallies. Shares of EchoStar Corporation fell to a 10-year low of $18.12 in December 2020, which represents a major support level.

After rallying to $30.90 in November 2021, EchoStar stock has fallen after failing to hold above this key level.

Chart courtesy of StockCharts.com

In the immediate term, watch for SATS stock to hold at the next downside support level just over $20.00. That could be a nice entry point for investors.

A bounce could see EchoStar stock rally back toward $31.00, followed by $42.00 and $50.00, representing a potential near doubling.

Analyst Take

While EchoStar Corporation’s technical picture shows a strong risk/reward ratio, if SATS stock can hold and rally from its current oversold condition, there are bullish non-technical factors to consider. These include strong industry tailwinds and signs of the company improving its fundamentals.

EchoStar stock is a favorite of institutional investors, with 272 institutions holding a 97% stake in the company. (Source: “EchoStar Corporation (SATS),” Yahoo! Finance, last accessed January 17, 2022.)

Moreover, EchoStar Corporation’s valuation is attractive. It trades at a cheap 0.7 times its book value, 1.1 times its consensus 2022 revenue estimate, and 12.3 times its consensus 2021 earnings-per-share (EPS) estimate.