Strength of demand suggests investors should ‘buy’ global communications firm Inmarsat

Otmane El Rhazi from Mindful Money » Shares.

As global satellite operator Inmarsat announces its full year results, Ian Forrest, investment research analyst at The Share Centre, explains why its shares are a ‘buy’ for investors…

In its full year results reported this morning Inmarsat beat market expectations with a 2% rise in revenues to $1,286m. The global communications operator registered good growth in its maritime, enterprise and aviation businesses, although the government arm remains weak with sales down 21.7% in 2014. Investors should note that the company finished the year strongly with sales rising 6%, helped by a 9% increase in revenues from mobile satellite services.

The group also announced that it expects 2015 to be broadly similar to 2014 with growth in maritime, enterprise and aviation. However, investors should be aware that it foresees continued weakness in its government sales, especially in the US.

We recommend Inmarsat as a ‘buy’ for medium risk investors with a balanced portfolio. The company’s shares have outperformed the market by 20% over the last six months, but the strength of demand for its services, especially maritime, and the group’s ability to develop new products and services should generate further growth. Despite cuts in defence spending remaining a weak point, especially in the US, there are signs that this may be turning around with the military portion of the budget on the rise.