Bank: SES rated overweight
October 21, 2022
Analysts at Barclays have taken a close look at satellite stocks and while the bank marked down Iridium Communications (by 4.9 per cent, to a price target of $45) it has rated SES as ‘overweight’ for investors.
In general terms capacity demand for telecommunications services is staying on a path for “exponential” growth (Barclays estimates 15-fold growth between 2020 and 2025), outstripping some still-strong demand growth within the industry, the bank’s report says.
The bank gave a positive ‘overweight’ advice on Space Mobile (which has just opened a UK headquarters at Space Park Leicester) saying it sees a compelling investment opportunity if the technology works as planned and management executes.
However, Barclays analyst Mathieu Robilliard cautioned, saying: “Combined with high levels of capex this means, in our view, that a number of new projects will not earn their cost of capital, and unless they fold/consolidate they are likely to continue to pressure data services pricing in the industry.”
Robilliard suggested that the “next big thing” – which is direct connection to smartphones from satellites – will be a “complement to the terrestrial networks rather than a competitor for this new business opportunity (as it is in the other verticals where it already operates).”
Barclays wrapped its overview with ‘equal weight” advice on Viasat, and ‘overweight’ on SES.