Morgan Stanley has given an Overweight recommendation to Eutelsat’s stock, arguing that the Paris-based satellite operator was performing well across all sectors and that management appeared increasingly upbeat after difficulties experienced in 2012.
Morgan Stanley pointed out that Eutelsat had beaten expectations in its last two results announcements. It said that the high throughput Ka-Sat platform, after a few initial hiccoughs, was now being well-received, that multi-usage contracts were looking promising and that pricing pressure in south-eastern Europe appeared to be easing.
Morgan Stanley said that Eutelsat’s financial performance was likely to beat expectations in the second half, with the launch of Eutelsat 70B and 21B bringing extra capacity online. “We think that the most important focus for investors is that the business is clearly improving,” it said.
Morgan Stanley is upbeat on the prospects for fixed satellite services, saying that HD will continue to push up demand and that the industry is benefiting from long-term contracts creating highly visible cash flows.