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Eutelsat’s downgrades “out-dated and overdone”

Paris-based Eutelsat has had a terrible month with its share price hammered and consequential mark-downs for the complete satellite sector.

Giles Thorne, equity analyst at investment bank Jefferies, in a note released on the evening of June 28th, says that Eutelsat’s position, in particular how it is addressing over-supply of capacity in the market, means that its “de-rating is out-dated and overdone”.

Thorne was basing his comments on a presentation made by Eutelsat’s senior managers earlier on June 28th, and said the ‘over-capacity’ threat from a slew of High Throughput Satellites (HTS) is not – in fact – disruptive, but is “boosting” the overall market. Eutelsat had admitted that there is an over-supply of capacity in Africa and LatAm, but in general terms Eutelsat’s approach to the market and the opportunities in ‘Data’ carriage is “ring-fenced” with plenty of contracted backlog.

But the backbone of Eutelsat’s business is in Video, and here, the bank’s note says that Eutelsat’s “robust” view of video’s prospects is good. There’s plenty of upside for Eutelsat, notably in the large number of channels who have yet to adopt HD TV, and further growth in Ultra-HD.

June 28th saw Eutelsat’s share price rise a modest 1.36 percent to €16.04. But back in mid-May their price was €27.

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