Eutelsat suffers from negative bank report
December 2, 2024
Investment bank JP Morgan has lowered its Eutelsat share price target from €3 to just €2.80 (and ‘SELL/Underweight’ advice to clients). The move prompted a share sell-off and a rapid collapse and its already extremely low share price fell back from about €3 on Nov 28, to a low point of €2.84 on the 29th and a ’52-week low’ for Eutelsat’s share value. A modest recovery later on November 29th took the price to €2.91.
However, a report on November 15th from Morgan Stanley told shareholders in Eutelsat to ‘HOLD’ and gave a target price of about €4.39 but down from the previous €5.15.
During the past 52-weeks of trading Eutelsat’s share price has fallen some 22 per cent. Indeed, Eutelsat’s long-suffering shareholders have suffered a 79 per cent fall in their shareholding value over the past five years.
Investors in Eutelsat Group have had a tough year, with a total loss of 18 per cent, against a market gain of about 6.9 per cent. Even the share prices of good stocks drop sometimes, but investors want to see improvements in the fundamental metrics of a business, before getting too interested in buying shares.
Eutelsat is in a period of investment, both in funding its ‘merger’ with OneWeb and the challenges of securing relationships with some key markets (not least India) for OneWeb.
It is also in the process of designing its ‘second generation’ of OneWeb satellites. It is also holding cash back in readiness for an investment reported to be around €2 billion as a lead member of the SpaceRISE consortium which is working with the European Commission to build a highly-secure constellation of satellites where Eutelsat will play a key part (along with SES and Hispasat).
Nevertheless, it is tough to compare today’s position with that of five years ago when trading was around the €15 level, or in 2014 when its share price frequently topped €30 per share.
Eutelsat’s next quarterly update will be issued on February 14th.
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