Jefferies Makes Big Changes to Franchise Picks Stock Portfolio

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With the market just a few weeks away from the proverbial summer doldrums, which by the way, could be less dull this year, many of the top firms we cover on Wall Street continue to make changes to their high conviction stock lists. With the first-quarter earnings pretty much digested, and expectations for the balance of the year a little clearer, it’s not surprising to see some adjustment.

In a new research report, Jefferies analysts make some big changes to the firm’s Franchise Picks stock list. The Franchise Picks have outperformed the S&P 500 solidly, not only this year up over 5% to the index, but also since inception. The list remains a solid combination of growth and value companies, and the selections make good sense for long-term stock investors.

One exciting company is added and two are removed, one of which was spun off from a member that remains.

Dish Network

The Jefferies team and others on Wall Street think the value of the company’s spectrum is significantly undervalued by the market, and the stock was added to the Franchise Picks list. Dish Network Corp. (NASDAQ: DISH), through its subsidiaries, provides approximately 13.909 million pay-TV subscribers, as of Sept. 30, 2015, with the highest-quality programming and technology with the most choices at the best value. Dish offers a high definition line-up with more than 200 national HD channels, the most international channels and award-winning HD and DVR technology.

Dish also offers its Sling TV services that require an internet connection and are available on streaming-capable devices, including TVs, tablets, computers, game consoles and smartphones, primarily to consumers who do not subscribe to traditional satellite and cable pay-TV services. Additionally, the company operates Sling International, which offers over 200 channels in 18 languages. The Sling domestic package consists of over 20 channels and tiers of programming, including sports, kids, movies, world news, lifestyle and Spanish language, and premium content, such as HBO.

The Jefferies rationale for adding the stock to its Franchise Picks is that the analysts feel that Dish’s mid-band spectrum is extremely valuable. The company’s mid-band spectrum is apparently very well placed for data growth and enhancing network capacity, and the analysts feel that carriers would definitely show up. They also note that there is limited visibility into the next major spectrum that could come to the market, but they say that Dish has the only nationwide, sizable spectrum that would fit with the four national carriers network requirements. They value the spectrum at a massive $45 billion, or a tax adjusted $32 billion. That compares with a current enterprise value for the company of $32 billion.

The Jefferies price target for the stock is a massive $80. The Thomson/First Call consensus price target is much lower at $72.10. The stock closed Friday at $46.49, up almost 5% on the day.