The stock, known as a bet on SpaceX, fell on its first day in the S&P 500. Worth buying

Shares of satellite communications operator EchoStar fell in price at trading on March 23 - the first day after its inclusion in the S&P 500, while the index itself rose sharply. The company's capitalization has jumped more than 300% over the last year. Its securities remain one of the few public ways to bet on SpaceX before the IPO, writes Barron's. Analysts rate EchoStar's prospects moderately optimistic despite the rally.

Shares of EchoStar added about 1.2% in trading on Monday, March 23, but ended the day down 0.3%, while the S&P 500 rose 1.2% amid Donald Trump's statements about progress in the U.S.-Iran talks. This was the first session of the company's securities in the index - the impending inclusion was announced on March 6, and since then EchoStar's capitalization has added about 3%. Typically, news of a stock's inclusion in the S&P 500 can give a stock a boost because it opens it up to a wider pool of investors, Barron's notes.

However, the dynamics of EchoStar, which has risen in price by 312% over the year, is explained in recent months primarily by its stake in Elon Musk's space company SpaceX, the publication writes. The satellite operator owns shares of SpaceX for about $11.1 billion, having received them as a result of deals on sale of frequency spectrum: $8.5 billion - after the deal in September and about $2.6 billion - in November.

The stake was acquired at a SpaceX valuation of about $400 billion, and the subsequent rise in its valuation has largely coincided with the performance of EchoStar stock, Barron's points out. Because SpaceX remains non-public, EchoStar's securities have become a rare available vehicle for investors to bet on Musk's aerospace business.

EchoStar initially developed satellite and telecom businesses, including a fleet of satellites and mobile operator Boost Mobile, but in recent months the company has actually transformed into a holding company focused on frequency management and investment, Barron's recalls.

Echostar shares are recommended to buy by four analysts whose ratings are tracked by MarketWatch, but the same number of analysts take a neutral stance, advising to keep these securities in the portfolio. At the same time a month ago the company had three bullish and neutral ratings each, and in addition there were three bearish ratings. Now none of Wall Street analysts suggests selling its shares.

Echostar securities have an average target price of $117.9, suggesting a potential upside of 6.8%.

This article was AI-translated and verified by a human editor