London-based satellite operator Inmarsat saw millions wiped off its share price on September 5th after a highly negative equity report from investment bank Numis.

Numis delivered a “SELL” note to its clients, saying there were many reasons to be cautious about Inmarsat’s future revenue and profit margin prospects. Numis said it didn’t contest management’s view that demand for satellite connectivity will keep rising for years to come, but caution about the company’s outlook was heightened given its current share price.

The report doubted whether revenues from Inmarsat’s maritime business would grow at 2.5 per cent this year, and also threw cold water on Inmarsat’s aviation division’s ‘in flight’ connectivity deal with Boeing.  The Numis note to clients also delivered a warning that the operator’s aviation profit margin could be as low as 40-50 per cent over the next 5 years (it was 68 per cent last year).

Not helping is Numis expectations that Inmarsat’s Capital Expenditure is likely to surge 10-20 percent higher than most expectations.

Inmarsat’s share price crashed from £7.35 at the start of trading yesterday to £6.83 by close of business (6.78 per cent).  Just 3 months ago in June the stock was riding high at £8.43.

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