JPMorgan downgrades Inmarsat to 'neutral'
JPMorgan Cazenove downgraded Inmarsat to ‘neutral’ from ‘overweight’ and cut the price target to 830p from 950p.
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JPM said its buy case had been predicated on the belief that GX will unlock new revenue opportunities, and underpin a double digit earnings before interest, taxes and depreciation growth outlook.
“Whilst we remain confident in this mid-term thesis, the near-term story seems clouded by ongoing legacy pressures, a slower-than-hoped ramp-up in Aviation revenues and rising GX/aviation investment needs.”
As a result, JPM’s 2017E EBITDA estimate is now 8% below consensus and its 2018 revenue forecast is marginally below guidance.
“These overhangs lead us to move to neutral; however, we argue that once expectations rebase, investors may once again be drawn to Inmarsat’s (still) enviable growth story and its now de-rated valuation.”
Inmarsat is due to release its fourth-quarter results and full-year 2017 outlook in March and JPM expects management to refrain from providing any new mid-term revenue guidance.
At 0905 GMT, the shares were down 3.5% to 680.50p.