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Deutsche Bank adjusted its outlook on Eutelsat Communications SA (ETL:FP) (OTC: OTC:EUTLF), reducing the price target to EUR 3.00 from the previous EUR 3.10, while maintaining a Sell rating on the stock. The revision reflects concerns over the company's growth prospects, as Eutelsat faces challenges due to delays with its OneWeb satellite project.
The analyst from Deutsche Bank noted that Eutelsat's forecast for fiscal year 2025 indicates no growth, which is a direct result of ongoing delays with OneWeb. These delays have led to a less than expected contribution from the OneWeb venture to Eutelsat's overall financial performance.
The analyst's report underscores the limited impact OneWeb has had thus far and expresses concerns about Eutelsat's leverage and backlog.
Initially, Eutelsat had projected that OneWeb would generate revenues between EUR 150-250 million for fiscal year 2024 and EUR 400 million for fiscal year 2025.
However, the new estimates suggest that OneWeb only brought in EUR 67 million in revenue for fiscal year 2024, a slight increase from EUR 50 million in the prior year. For fiscal year 2025, the expectation has been adjusted to approximately EUR 110 million in OneWeb revenues, which implies that a EUR 40 million decline in video revenue would be compensated by the ramp-up of OneWeb.
The report concludes that consensus EBITDA forecasts for Eutelsat may be overestimated by roughly 10%. This projection takes into account the anticipated performance of OneWeb and the overall stagnation in growth for the group in fiscal year 2025. The reassessment by Deutsche Bank reflects a cautious stance on Eutelsat's financial trajectory in light of the recent developments with OneWeb.
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