Deutsche Bank’s (DB) advice to clients holding Eutelsat shares is to ‘SELL’ their stock. Its previous advice was to ‘HOLD’ their shares. DB now says its preferred satellites company within its coverage is Luxembourg-based SES which it rates ‘BUY’.

DB says it is concerned over operational delays which it says are weighing on its OneWeb satellites business, following last year’s merger with the UK-based company.

Eutelsat issued a downbeat trading update on January 29th, and will announce its Q2 and half-year numbers on February 16th.

In its advice, DB points to “increasingly limited near term visibility in the OneWeb business following rollout delays alongside capex drags from the new [OneWeb] constellation”.

Eutelsat in late January cut its revenue and earnings targets for 2023-24 citing delays at OneWeb’s low earth orbit activities.

Eutelsat has recently suffered a downgrade from Ratings agency Fitch.

DB says: “These operational concerns coincide with near term refinancing needs (60 per cent of debt over four years) which will see average CoD (cost of debt) double from c.3 per cent.”

The investment bank said that while it sees long-term growth opportunities in the merger with OneWeb, the firm attributes the recent profit warning to a phase of substantial investment, which has considerably increased the company’s debt and will, in its view, penalise cash flow generation.

DB cut Eutelsat’s share target price from €4 to €3. Eutelsat closed at €3.85 on February 9th, an improvement on the previous day of 4.73 per cent.

Other posts by Chris Forrester:

1. Virgin Galactic in stock split
2. Thuraya-3 suffers major problem
3. AST SpaceMobile hit by Class Action
4. Optimism under threat at SES
5. Rivada visits Terran Orbital’s manufacturing HQ
6. Avanti wins spectrum debt obligation case
7. SpaceX breaks records for re-use launchers
8. IRIS2 already in trouble?
9. Intelsat contemplates next steps

Categories: Blogs, Business, Inside Satellite

Tags: Deutsche Bank, eutelsat, fitch