Investment bank Jefferies has adjusted its financial model for satellite operator Eutelsat currently in the middle of a potential takeover by telecoms entrepreneur Patrick Drahi.
Jefferies reiterates its ‘BUY’ advice to clients although adjusts downward its share price target of €15.50 (from €18.00) although the operator’s share price has been somewhat overtaken since the Drahi news emerged. For example, Eutelsat’s share price closed on October 1st at €12.16 having risen 2.14 per cent during the day.
Eutelsat will release its Q1 financials on October 27th.
The new Jeffries forecasts see Eutelsat’s overall revenues for the 2022-2024 period being lowered by about 7 percent. “We expect flat Operating Vertical revenue throughout our forecast period (against guidance for a return to growth from FY23).
EBITDA forecasts are also lowered by about 9 per cent for the same period.
The bank’s ‘Base Case’ forecasts suggest that Eutelsat’s broadcast revenues will fall by about 1 per cent during the 2022-2024 period. Fixed Data & Professional Video revenues will decline 5 per cent during the period.
Jefferies’ ‘Upside Scenario’ suggests that Video will remain flat, and Fixed Data & Pro. Video decline at just 2 per cent. With a “solid execution of growth opportunities in Fixed Broadband & Mobile Connectivity” could lead to a Price Target of a much more attractive €20 per share.
However, should revenues slump across all the major verticals then Eutelsat’s share price target could crash to just €8 states the bank.