The bank warns investors to “prepare for Eutelsat guidance cut” and has downgraded its advice to clients to ‘SELL’ .
The bank says that its conclusion is based on the likelihood that Eutelsat would have to adjust its guidance downward for this fiscal year (to June 30th) and further modify its formal guidance for revenue and profit expectations for the upcoming year.
“Eutelsat has already softened its guidance for this fiscal year from “slight growth” to “broadly stable”,” said the bank’s report. “But we think they will miss this and will need to cut next year’s “return to growth” target too. Fiscal Q3 (results on May 14th) will be the quarter when both start to look unrealistic. We are cutting EBIT estimates again, primarily for Fixed Data decline; and, with our expectation of Video worsening next year, we are now 9 per cent below consensus for this year and 18 per cent below next year on EPS.
“We are also raising our estimate of normalized CAPEX to reflect the trials announced by ETL of Low Earth Orbit (LEO) satellites,” added the bank.
The bank lowers its Target Price for Eutelsat shares from €13 to €12.50.