Struggling DISH Stock Vulnerable to Downgrades

Analyst sentiment has been overwhelmingly bullish on DISH

Apr 24, 2018 at 10:12 AM
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Since early August, shares of satellite TV provider Dish Network Corp (NASDAQ:DISH) have experienced a sharp downtrend. The stock is already down roughly 22% in 2018, and historical data suggests the recent encounter with the 40-day moving average could be a bearish signal, too. While this technical outlook alone could warrant the attention of contrarian bears, the sentiment backdrop is even more brow-raising.

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For starters, the long-term underperformer still sports seven "strong buy" analyst ratings. What's more, the average price target stands all the way up at $64.72 -- a roughly 74% premium to current levels. There is a real possibility for future downgrades and/or price-target cuts to come through and pressure DISH lower.

Also, the stock failed to benefit from a notable decline in short interest during 2017, pointing toward its underlying technical weakness. And with short interest back on the rise in recent reporting periods, bears could only be emboldened by the technical weakness, which could add to the selling pressure on the security.

Dish Network's Schaeffer's Volatility Index (SVI) is attractive, too, as this reading of 42% ranks in the bottom one-third of readings in the past year -- hinting at lower-than-usual volatility expectations for near-term options.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this DISH commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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