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Just at the moment the ‘big three’ satellite operators (Intelsat, SES and Eutelsat) are suffering depressed share prices amid concerns that delayed launches and commoditised revenues pose a threat to future prospects.
“Not so” argues a major, 95-page, report from equity analysts Jefferies, who say that the industry is going through a “quantum leap” in terms of future prospects, focusing on reusability of satellites, the implementation of ‘space tugs’ in their future satellite planning and an “assured” position as far as demand is concerned, especially in terms of video demand.
SES comes out of the report well, with a “BUY” recommendation as being at the forefront of each of the industry’s key growth themes and helped by the anticipated consolidation of its stake in O3b.
Also doing well is Eutelsat, which Jefferies upgrades to a “BUY” recommendation and “despite lacking some of the thematic ‘fizz’” says the bank, “its earnings trajectory should be assured”.
Jefferies place Intelsat as a ‘HOLD’ largely because the analysts do not see 2016 as an ‘inflection year’ for the operator. “The bulkier later Intelsat EPIC launches provide reason for optimism,” says the bank, while admitting that today’s near $10 valuation represents a “rock bottom’ bargain for investors.