Satellite Business Week starts with good news

Euroconsult’s Paris ‘Satellite Business Week’ opened September 11th with a series of highly-positive reports on the ‘state of the industry’. In truth, the news for satellite operators this past year has not always been good, but those older sentiments are fast-evaporating if equity analysts at investment bankers Jefferies are right.

Jefferies, and analyst Giles Thorne, described the 2016 “existential crisis and video apocalypse” as being “overdone” and says the pendulum is continuing to swing in favour of a long bias towards the industry. “We reiterate Buys on Inmarsat, SES and Eutelsat. We upgrade Intelsat to Buy. We initiate on EchoStar with a Hold,” says Thorne is a comprehensive 140-page report.

Back in May last year a profits warning from Eutelsat sent the whole sector into tailspin with most of the worries concentrated on the DTH and pay-TV sectors. One of the major concerns was that the viewing audience was shifting away from ‘conventional’ viewing into consuming its entertainment via OTT and web-based delivery.

Thorne adds that even Sky’s “infamous dish-less SkyQ service will undoubtedly still use a legacy broadcast technology (DTT) rather stopping the bear argument in its tracks. The one area we are bearish is US direct-to-home: the US pay-TV market is too mature for the status quo to be maintained (and this informs the cautiousness in our EchoStar initiation). We reiterate our view that the long-term vision for TV distribution remains a hybrid architecture and that satellite operators are best served by bulking on video service capabilities.”

The bank’s report looks at all the operator’s main vertical divisions as well as Video And the threats from further compression, as well as including Mobile, Maritime and Aviation, Government services and High-Throughput satellite demand and the growth – or otherwise – prospects in each.

Jefferies gives Eutelsat (“Buy”) a target price of €28, SES (“Buy”) $24.50, Intelsat (“Buy”) $5, Inmarsat (“Buy”) £11.00, ViaSat (“Hold”) $67, EchoStar (“Hold”) $65.

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