Investment banker Morgan Stanley, in a major examination of media stocks, likes the satellite sector very much – and Eutelsat in particular. “Eutelsat presents a mix of high full cash-flow visibility and robust earnings,” says the bank, “[with its] growth underpinned by long-term structural trends. Management has one of the best track records of the industry.”
Amongst the areas highlighted by Morgan Stanley is Eutelsat’s exposure to HDTV, which in Western Europe stands today with a penetration level of about 8 per cent, but is predicted to grow to about 36 per cent. Similar expansion can be anticipated over the other regions where Eutelsat has a strong presence, not least Central Europe (today 5 per cent) and will grow to 21 per cent by 2020.
The report adds: “Revenue momentum should improve further in 2012 as the utilisation rates of W3C and AB-7 ramp up. The next satellite launch is in December 2012 meaning that operational risk is minimal. Trading at a ~15 per cent discount to historical multiples, we view valuation as attractive. We are Overweight,” says the bank.