Intelsat SA (NYSE: I) shares have taken a beating in the past week, plummeting more than 70% on concerns related to the Federal Communications Commission opting for a public auction of the company’s C-band spectrum.
Fortunately for Intelsat investors, one Wall Street analyst said the sell-off has created a buying opportunity.
Raymond James analyst Ric Prentiss upgraded Intelsat from Market Perform to Outperform and set a $12 price target.
Prentiss said Intelsat shares have been hit by a one-two punch of the FCC decision for a public spectrum auction and then a Senate bill suggesting the U.S. Treasury would take at least 50% of the auction proceeds.
However, a new House bill calls for the Treasury to get only 25% of the proceeds.
“Plus some previous FCC run spectrum auctions have included government stakes of ~20-40% and we think that is a more likely final outcome as a 50% or higher stake would probably result in litigation from the satellite operators and ties the spectrum up in court instead of hanging on towers providing much needed 5G capacity,” Prentiss wrote in a note.
Given the extreme pullback in Intelsat shares, he said the risk-reward balance is now skewed to the upside.
Intelsat's stock traded higher by 20% to $7.37 per share at time of publication.