SES stock rating reinstated at Buy by Berenberg on Intelsat acquisition

Investing.com - Berenberg has reinstated coverage on SES SA (PAR:SESG) (OTC:SGBAF) with a Buy rating and a price target of EUR9.60, citing the satellite operator’s upcoming acquisition of Intelsat. According to InvestingPro analysis, SES appears undervalued with a current market capitalization of $2.86 billion.

The research firm expects SES to extend its competitive advantage once it closes its acquisition of Intelsat in the second half of 2025. Berenberg also believes SES will benefit from a rapidly changing geopolitical landscape and a gradual shift away from U.S. satellite capacity reliance. The company’s strong momentum is evident in its impressive 126.83% price return over the past six months, with InvestingPro data showing a "GOOD" overall financial health score.

Berenberg sees material optionality value to SES from future additional C-band proceeds, adding another potential upside for the satellite communications company. The firm highlighted these proceeds as a significant factor in its positive outlook.

SES is targeting EUR1 billion in combined free cash flow by 2027/2028, according to Berenberg’s research note. This target represents a substantial financial milestone for the company following its planned acquisition.

The satellite operator currently trades on a 16% normalized equity free cash flow yield, Berenberg noted in its analysis of the company’s valuation metrics. This yield figure factored into the firm’s decision to assign a Buy rating. InvestingPro data reveals the company has maintained dividend payments for 27 consecutive years, with additional insights available in the Pro Research Report.

In other recent news, SES SA has seen its stock rating upgraded by Kepler Cheuvreux from "Hold" to "Buy," with an increased price target set at €7.80. This upgrade is attributed to several factors, including SES’s potential benefits from increased European defense spending and its involvement in the European Union’s IRIS² project. The analyst, Alessandro Cuglietta, has raised the sales and EBITDA margin forecasts for the fiscal year 2030, expecting stronger growth in the Government and Connectivity sectors. SES is also anticipated to rapidly reduce its debt following the acquisition of Intelsat, leveraging its robust free cash flow and expected synergies from the merger. Additionally, the company could potentially receive between $1.5 billion and $4 billion from the upcoming C-band spectrum auction. These developments reflect a positive outlook on SES’s future financial performance, with Cuglietta noting the company as an attractive defense play with a European Union sovereignty angle.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.