Eutelsat Shares Stabilize as Analyst Removes Sell Rating

Eutelsat FR0010221234

A significant shift in sentiment is emerging for Eutelsat's equity, which has been under sustained pressure. The catalyst is a major analyst revision: Deutsche Bank has withdrawn its sell recommendation on the French satellite operator, upgrading its stance to "Hold." This move follows weeks of market strain linked to a partial divestment by SoftBank.

The primary driver behind this reassessment is a substantial €1.5 billion capital increase, which is expected to be finalized before the year's end. Deutsche Bank analysts believe this infusion fundamentally alters the company's financial risk. The key metric of net debt to EBITDA is projected to fall from a critical level of 3.9x to a more manageable 2.5x. This directly addresses the core solvency concerns that had prompted the bank's downgrade to "Sell" back in February 2024.

The bank has maintained its price target of €2.30 per share. With the stock recently trading around €2.09, this implies a potential upside of approximately 10%.

Key Developments at a Glance:
* Deutsche Bank shifts its rating from "Sell" to "Hold."
* The €2.30 price target is reaffirmed.
* Leverage ratio is forecast to drop from 3.9x to 2.5x.
* A €1.5 billion capital raise is nearing completion.

Navigating Post-SoftBank Volatility

The timing of this upgrade is notable. In early December, SoftBank's sale of roughly 36 million subscription rights triggered a sharp decline, sending Eutelsat's share price down over 7%. The Japanese technology investor's partial retreat introduced significant market nervousness. Deutsche Bank's revised "Hold" rating now signals that, irrespective of SoftBank's actions, Eutelsat's financing pathway appears secure.

Strategic Investments and Financial Realities

The capital raise is a strategic necessity, not merely a balance sheet exercise. Since merging with OneWeb, Eutelsat has positioned itself as a European contender in the satellite broadband arena, competing with ventures like SpaceX's Starlink. However, building its second-generation Low Earth Orbit (LEO) constellation requires billions in investment. This comes at a time when traditional video revenue from its TV broadcast business continues to erode.

While the new connectivity services are intended to fill this gap, they have yet to do so fully. Analysts caution that despite the improved debt outlook, free cash flow is likely to remain under pressure in the medium term. The company's strategic importance for Europe's digital sovereignty is clear, but operational proof of its new business model's success is still pending.

The shares are currently attempting to consolidate above the €2.10 level. The "Hold" rating suggests analysts see limited immediate downside risk, yet expectations for near-term growth remain tempered. The focus now shifts to Eutelsat's execution. By the time quarterly results for February 2026 are released, the market will expect clear evidence that the OneWeb integration is delivering on its ambitious connectivity revenue targets.