SES shares fell just over 2% on Monday following a move by Barclays to downgrade the company from "equal weight" to "underweight" and to cut its price target from €7.75 to €7.05. Barclays' new target implies roughly a 10.7% downside from SES's €7.89 close on July 1, even as the bank retained a Neutral stance on the wider European media sector.
In its note, Barclays said the market's C-band catalyst "is not exactly behind us but it is better understood," and that the earlier enthusiasm tied to a potential SpaceX IPO has also subsided - "even if SES has more or less given back the gains in its shares from that period of market focus on the sector." The bank added that, from this point, "we think the SES story flips back to its fundamentals."
Barclays listed three principal drivers behind the downgrade. First, the broker emphasised that delivering consensus forecasts will require "significant underlying improvement" across several areas in 2026 - an outcome the bank called "possible but uncertain." Second, Barclays said its estimates sit below consensus for the 2028 horizon, being 5% beneath revenue consensus and 3% below adjusted EBITDA consensus, with the shortfall explained by "fears around competition in particular." Third, the bank said investors are likely to sharpen their focus on where Starlink and Amazon LEO satellite constellations may damage the incumbents' market positions, noting Starlink "continues to demonstrate strong growth."
On the regulatory and spectrum front, Barclays set out that 160 megahertz of C-band spectrum will be cleared and that the clearance process must be completed by 2031. The bank noted the incentive framework for satellite operators will draw on the previous C-band process "but not exactly the same." Applying the same methodology as the earlier process, Barclays calculates net proceeds for SES of $3.9 billion, or €3.4 billion. The bank also pointed out that the precise cash incentive amounts will be disclosed on July 22.
Barclays flagged a key downside risk to its thesis: if SES receives a C-band payment meaningfully higher than the $3.9 billion estimate. The broker quantified sensitivity, saying: "Every €100m extra that SES receives adds c.2% to the value per share for the group that we calculate in our valuation work."
For valuation mechanics, Barclays applied a 5.0x EV/EBITDA multiple to SES's 2027 EBITDA, describing that multiple as "at the bottom end of incumbent telcos 2026 trading multiples." The analysts added that on an unlevered free cash flow yield basis, SES trades in line with Deutsche Telekom and Vodafone. Coupling those comparisons with a discounted cash flow analysis produced the €7.05 price target.
Finally, Barclays warned that the second half of 2026 "requires significant improvement in underlying rates of organic revenue growth in Government, Media and Mobility," a step the bank judged "achievable, but there are risks."
Market context
- Barclays' downgrade and reduced target followed a share-price pullback and a shift in market focus away from IPO-related excitement.
- The bank's revenue and adjusted EBITDA estimates sit modestly below 2028 consensus, driven in part by competition concerns.
- Valuation incorporates a €3.4 billion net proceeds assumption from C-band incentives and a conservative 5.0x EV/EBITDA multiple on 2027 EBITDA.