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SES in “rehabilitation mode”

Satellite operator SES is not winning friends in the investment community. Despite a couple of mostly positive investment reports last week, its share price has continued to be under pressure. Back in May last year, its share price was €35. Last week it barely touched €24.00.

A report from equity analysts at investment bank Jefferies, and written prior to the news that SES has lost the uplink contract covering Sky Deutschland’s business, names SES as its “preferred” player in the satellite sector, and suggests that the operator’s full year results (due February 26th) will continue the “rehabilitation” of SES, a process which started in its Q3 results last Autumn.

Jefferies says: “The 3Q15 results saw SES deliver welcome stability after a recent track record of lowering guidance. Prior to the 3Q15 results, we’d seen three de facto profit warnings in the preceding four quarters, the most potent of which was at the second quarter results. The headline issue then was the revenue headwind in fixed data caused by USD strength resulting in certain emerging market distributers suffering margin squeeze from buying satellite capacity in USD and selling in local currency. There were other issues, but of a lesser concern for us at this stage (further small solar circuit array failures, US sequestration). As has been the case throughout 2015, the absence of expansion capacity has allowed headwinds free rein to dominate the top-line narrative. By the time of the 4Q15 results, this dynamic should have changed (i.e. SES-9 launched) allowing management to reinstate some new guidance and turn the equity back on to a growth agenda.”

SES’s senior managers can only hope.

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