On Monday, Eutelsat Communications SA (LON:0JNI) (ETL:FP) (OTC: EUTLF (OTC:EUTLF)) saw its stock rating upgraded from Sell to Hold by CFRA, with a maintained price target of EUR3.50. 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% year-to-date, despite maintaining impressive gross profit margins of 83%.
The analyst at CFRA cited a forward-looking consensus EV/EBITDA multiple for the fiscal year ending June 2025 of 6.4 times, which compares favorably to Eutelsat's ten-year average of around 7 times.
The current EV/EBITDA stands at 5.68x, as reported by InvestingPro, which offers 8 additional key insights about Eutelsat's valuation metrics. Despite the upgrade, the firm's earnings per share (EPS) estimates remain unchanged at -EUR0.30 for FY 25 and EUR0.01 for FY 26.
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.
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