Advanced Television

Major bank reassesses SES and Eutelsat’s prospects

July 13, 2016

Equity analysts at Deutsche Bank have not recently been totally supportive of the satellite sector, but that changed July 12th when – having “picked through the wreckage” it changed its mind on SES, and is now recommending to investors that they should ‘BUY’ SES shares.

Its report says that despite both SES and arch-rival Eutelsat having seen their stock prices plummet in the period since Eutelsat’s May 12 profit warning the bank’s view is that while its fundamental concerns remain for the overall health of the industry, it sees “a marked difference in growth prospects between SES and Eutelsat which is being overlooked by the market”.

Equity analyst Laurie Davison says “SES can continue to grow earnings, Free cashflow and dividend. Conversely, Eutelsat’s case for recovery to growth is flimsy.” Deutsche Bank’s advice is that investors should ‘SELL’ Eutelsat.

Both companies have been conducting ‘Investor Day’ briefings, with Eutelsat guiding that it will be back in stable territory by 2018 and then growing revenues and profits for 2019. But Deutsche Bank disagrees, and suggests “Eutelsat will fail to recover to growth in 2019 contrary to its guidance”.

In comparison the bank says SES offers a “compelling risk-reward” and sees “stronger prospects for growth”. Davison cites a number of key areas for this growth at SES, not least the consolidation of O3b and playout and teleport business RR Media.

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