Inmarsat PLC (LON:ISAT) saw its shares move out of orbit today after Goldman Sachs downgraded its stance for the satellites operator to ‘neutral’ from ‘buy’ after cutting its estimates and target price.
The US investment bank reduced its medium-term revenue/underlying earnings (EBITDA) estimates by 3% and 8%, respectively, and decreased its 12-month price target to 580p from 860p.
READ: Inmarsat maintains full-year guidance despite "challenging" markets
In mid-morning trading, Inmarsat shares were 4.2%, or 20.20p lower at 465.6p.
In a note to clients, Goldman’s analysts said: "ISAT is facing higher costs associated with building out its inflight connectivity business (now 1,300 planes contracted), limited recovery in maritime and legacy declines."
They added: “We expect near-term momentum to be impacted by the ongoing debate around the dividend (which has broadly been uncovered by FCF since 2011) and see limited scope for positive earnings momentum until late 2018.”
The analysts also noted that, since being added to their buy list in August 2016, Inmarsat shares are down around 43% versus the FTSE World Europe index – up around 15% - driven by earnings downgrades as aero costs increased and revenue headwinds have persisted.