Shares in satellite communications company Inmarsat are flying high after an upbeat note from Goldman Sachs.
The bank repeated its buy rating following the company's third quarter results last month, and raised its price target from 556p to 711p. It said:
"After the third quarter results we upgrade our earnings estimates by 3% for 2008 and 2009 as a result of robust top-line growth from the quarter likely being sustained into year end. Additionally, we are removing Carphone Warehouse (rated buy) from the outperform side of the UK Relative Value List and replacing it with Inmarsat.
"We see the continued migration of customers onto higher bandwidth products as key to our buy rating. Beyond this we see a full entry into the handheld market, continued development of the in-flight market and any further developments in the shareholder structure [Harbinger Capital Partners owns 28% and might bid if it gets regulatory approval] as potential positive catalysts for stock returns in the medium to long term.
"We acknowledge risks that economic sensitivity may be higher than we anticipate."
Inmarsat has climbed 15.5p to 447.5p. Also on the way up is software group Sage, which had slipped yesterday ahead of today's full year figures. But a 3% rise in underlying profits and comments that it expected to "weather these turbulent times" has seen the shares recover, up 7p to 164.8p. In a buy note Merrill Lynch said:
"The resilience of the model is showing with subscription revenue up 10% somewhat balancing the weaker software sales number. Even software sales, while weak with 1% growth in the second half, are significantly more stable than other software companies in a recession.
"The company is preserving cash and the dividend is only going up by 3% to 7.21p, we see this as a prudent move.
"The outlook statement does not have any concrete numbers, as expected but highlights the difficult environment and resilient business model."
