Inmarsat's supply-demand imbalance leads to Barclays downgrade

Although Inmarsat is "well set for recovery", Barclays has downgraded its shares to an 'underweight' rating from 'equalweight' due to concerns over demand in the medium-term.

Following Inmarsat's "solid" first-quarter results the previous day and combined with contract announcements for its GlobalXpress high-speed satellite broadband over the past six months, Barclays sees the company as "well set for a revenue recovery and to meet its 2017-18 guidance".

However, analysts said their mid-term concerns remain: "supply is set to increase materially whilst demand growth should be more volatile; technological obsolescence is a question mark with VHTS [very-high-throughput satellite] around the corner", with the V-2 launch expected in June.

With the stock having recovered from its lows, the valuation now looks "unappealing", analysts said and while they edged the target price up to 750p, this implied around 9% downside and hence the downgrade.