Generally speaking, the recent newsflow for Paris-based satellite operator Eutelsat has been negative, however good news came on December 9th from market analysts at financial research specialist CFRA, which has upgraded Eutelsat from ‘Sell’ to ‘Hold’, and issued a price target of €3.50. Eutelsat’s share price closed on December 9th at €3.21, up on the day from a low of €3.12.
The revision reflects CFRA’s view that the market has now fully accounted for the company’s structural challenges. According to InvestingPro data, the company has struggled recently, with its stock declining nearly 46 per cent year-to-date.
The decision to lift the rating to Hold comes as CFRA believes that Eutelsat’s current market valuation sufficiently reflects the company’s known issues. The analyst pointed out that while there are ongoing structural problems within the company, their impact appears to be already factored into the stock’s performance.
In addition to the rating change, Eutelsat has recently exercised a put option with EQT (ST:EQTAB) Infrastructure VI fund. This move will result in the formation of a new entity that will encompass Eutelsat’s ground infrastructure assets, providing the company with an influx of cash. However, CFRA does not anticipate that this transaction will lead to significant operational improvements for Eutelsat.