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EchoStar (SATS) shares soared nearly 80% today after AT&T (T) announced plans of buying wireless spectrum licenses “covering virtually every market across the U.S.” from the telecom firm for $23 billion.
The transaction strengthens the wholesale-network services agreement between the two companies and offers SATS an escape from the recently mounting regulatory scrutiny as well.
Including today’s explosive move to the upside, EchoStar stock is trading roughly 250% above its year-to-date low in early June.
AT&T Deal Is a Major Catalyst for EchoStar Stock
The all-cash spectrum sale to AT&T is meaningfully positive for EchoStar as it instantly transforms its balance sheet.
It resolves regulatory pressure from the FCC over underutilized spectrum and removes uncertainty around 5G buildout obligations as well.
The deal positions EchoStar to retire debt, streamline operations, fund growth initiatives, and pivot toward a capital-light hybrid mobile network model.
With AT&T as its primary infrastructure partner, EchoStar gains long-term service stability while shedding costly spectrum assets.
All in all, the transaction signals strategic clarity, financial strength, and regulatory relief, all of which could lead to sustained momentum in SATS shares.
Why SATS Shares Remain Unattractive to Own
While the AT&T announcement sure is constructive for EchoStar shares, investors should practice caution since much of the related upside is already priced into the telecom stock at current levels.
SATS shares remain unattractive also because the Nasdaq-listed firm is yet to turn a profit. In fact, its losses are expanding at an alarming rate.
For the current quarter, consensus is for this Englewood-headquartered firm to lose $1.23 on a per-share basis – roughly 136% more than the $0.52 a share it lost in the same quarter last year.
EchoStar Has Pushed Past the Mean Price Target
Wall Street analysts also agree that EchoStar’s stock price rally following AT&T news on Tuesday is overdone.
According to Barchart, the consensus rating on SATS shares currently sits at “Moderate Buy,” but the mean target of roughly $37 indicates potential downside of more than 25% from here.
