Panamsat Holding Corp. continues to rise, ending the 10 trading days leading to our May 26 publication deadline for this issue at a historic high of $19.70 per share since returning to the public market earlier this year. Not too shabby for a company whose lone major announcement since the reporting of its first quarter financial report (SN, May 23) was the extension of an exchange offer for its senior discounts notes.

The company extended the expiration date for the exchange offer relating to all of its outstanding 10-3/8 percent senior discount notes. Panamsat is looking to exchange $416 million in aggregate principal amount at maturity of the notes, issued Oct. 19 and due in 2014, for a like principal amount of new notes. The original offer, commenced April 18, was set to expire May 24. The offer is now set to expire, barring future extensions, at 5 p.m. EDT May 31.

What the continued increase in the stock’s per share price suggests, however, is that there is investor confidence in Panamsat in particular and possibly in the satellite industry in general. New Skies, which remains in its 25-day quiet period following its May 10 initial public offering (SN, May 16), also hit a historic trading high, closing May 26 at $17.50.

DISH

Another example of how strong satellite stocks appear in the eyes of investors is seen in Echostar Communications Corp.‘sperformance this week. Banc of America Securities Analyst Douglas Shapiro downgraded the stock from a “buy” rating to a “neutral” rating, which likely contributed to a dip in the share price, but the stock recovered some of its lost ground, suggesting investors are maintaining a level of confidence in Echostar despite the downgrade by an industry analyst.

In a May 24 equity research report, Shapiro said Banc of America was downgrading the stock and lowering the price target from $37 to $32 based on its “belief that the risk/reward is no longer as compelling for several reasons.” Echostar’s share price took a hit the day after the report was released, closing at $28.95 May 25, down from a closing price of $29.53 the previous day. However, the stock rebounded slightly May 26, closing at $29.11.

Shapiro downgraded the stock due to concerns about Echostar’s 2005 gross subscriber additions, noting that “we calculate that few local launches, tougher competition in National Rural Telecommunications Cooperative territories, tougher competition in the Hispanic market and less contribution from SBC could create a gap of 400,000-500,000 gross adds this year” compared to 2004, or 12 percent to 15 percent of 2004’s gross adds figure. Shapiro noted that Echostar could make up the shortfall elsewhere, but added that “given growing concerns about the ability of the DBS business to compete long-term as cable operators and Bells increasingly market bundles of service, a gross add shortfall could play right into the bear case and consequently pressure the shares more than we believe is fundamentally warranted.”

Shapiro also noted that Echostar “could technically go private tomorrow, but we think this is unlikely for roughly a year and we don’t expect much buyback in the interim.” He added that the operator of the Dish Network direct-to-home satellite television service is not “a likely acquisition candidate in the near term either.”

One thing to note about this downgrade is that it was not followed, at least as we went to press, by downgrades from other Wall Street analysts. The bottom line is that satellite stocks appear to be holding their own, at least for the moment.