Citi upgrades Inmarsat; says it's oversold and Brexit resistent

Citigroup upgraded Inmarsat to ‘buy’ from ‘neutral’ saying it was oversold and Brexit resistent, and lifted the price target to 900p from 880p due to the new GBP/USD exchange rate.

The bank noted Inmarsat has fallen 34% in sterling over the last six months.

“We believe this is overdone and was partly, at least, due to the compounding of having its principal market (Maritime) going into a severe recession just as Inmarsat commenced its product migration to GlobalXpress (GX), coinciding with management deciding to advance the capex cycle for its next generation of satellites.”

Citi said that from here, the benefits of Inmarsat’s investments will become more apparent as more resellers and end-customers sign for GlobalXpress in maritime and as it achieves type approvals for civil aviation and starts to see more airline orders.

“Being dollar earning it also provides insulation against the risk of sterling weakness should the UK vote to leave the EU,” the bank added.

At 0933 BST, Inmarsat shares were up 4.5% to 740.93p.