SES must “credibly end its downgrade cycle”

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A note to clients from analysts at investment bank Jefferies is blunt as far as satellite operator SES is concerned.

While giving the company a severe downgrade from a target share price of €26 to just €16, the bank reminds investors that SES itself has lowered its full year 2020 (to December 31st) revenue guidance by 7.1 per cent but the bank suggests even lower revenues.

Jefferies says it expects SES’ important Video division revenues to fall by 7.8 per cent this year and the operators increasingly valuable Network division – which SES plans to spin off into a new business – expected to be 6.3 per cent lower.

The bank’s view is that this year’s overall revenues will fall 8 per cent.

Consequently, Jefferies says that despite being helped over the next few years by FCC-generated income from the auction selling off SES C-band spectrum (expected to be €3.99 billion gross) it still means an overall lower price target to €16 per share.

As at the close of business on April 17th those shares were worth €6.53, an up an impressive 9.2 per cent on the day from €5.98 with the upward thrust helped by the imminent ending of the qualifying period for the SES dividend payout (due on April 23rd).

“The equity is going to remain depressed until: visibility is given into how SES keeps leverage <3.3x over the next 2 years; and management credibly ends the downgrade cycle,” states the bank.

SES will make its Q1 quarterly earnings report on May 7th.


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