Yesterday saw a host of downgrades and other poor news from ASX companies of all sizes - all understandable in the current terrible investment climate as the combination of the coronavirus pandemic and the idiotic price war in oil between Russia and Saudi Arabia wreck market confidence and share price.
More problems for troubled satellite broadband provider Speedcast with ratings group, S&P downgrading Speedcast’s credit rating a day after the company asked for an extension of its trading halt to February 27.
Things must be worse than we know at embattled satellite broadband provider Speedcast after it yesterday extended its trading suspension until February 27, or the release of the company board’s review of “all elements of the preliminary FY19 result.”
For the best part of half a year now, satellite broadband group, Speedcast has been on the suspicion list after a series of shock and surprising downgrades drive now it seems by an acquisitions regime that has gone wrong.
UBS believe the stock is benefiting from potential earnings upgrades in FY19 from a rebound in energy verticals, as well as a multiple re-rating if investors obtain confidence that strong organic growth has returned.
2017 results were in line with expectations. Management commentary has suggested there is upside risk to earnings in outer years should a prolonged oil & gas recovery continue. Morgans reduces FY18 and FY19 forecasts for earnings per share by -2%.
UBS notes the upside it previously forecast has now crystallised, with the company securing a 10-year contract with NBN Co to deliver enterprise grade satellite services. While the base contract is $107m, the broker notes there is upside to $184m, depending on the uptake.
The company has completed the acquisition of UltiSat ahead of expectations and indicated the energy sector has experienced its third quarter of stable revenue and the pipeline is growing. Harris CapRock is almost fully integrated and Morgans suggests the downside is dwindling.
Following a change of analyst, Credit Suisse resumes coverage of the stock with an Outperform rating and $4.10 target. The broker considers the deal with CapRock is transformative at an attractive price.