What happened

Analysts dueled over Intelsat's (OTC:INTE.Q) intrinsic value last week, with JP Morgan arguing the stock might have "little to no" value at all, while Intelsat bull Raymond James suggested the stock was still a buy.

But that didn't last long.

This morning, in a note covered on TheFly.com, investment banker James suddenly pulled his endorsement of Intelsat stock, which is down 10% as of 12:40 p.m. EST in response.

Glowing red stock arrow trending down

Image source: Getty Images.

So what

What prompted James' rethink? Basically, the analyst went back and re-crunched the numbers laid out in the Federal Communications Commission's (FCC) recent 185-page plan for auctioning off C-band spectrum currently licensed to Intelsat and its fellow members of the C-Ban Alliance.

Working off the FCC's description of about $14 billion in payouts to be split among satellite providers -- out of perhaps $77 billion in total proceeds from the spectrum auction -- James estimated that when all's said and done, Intelsat might reap perhaps $4.852 billion from this auction of its spectrum.

Now what

That sounds like a lot -- until you recall that Intelsat is lugging around a $14 billion load of debt, net of cash on hand. $4.852 billion might chip away at a little of that debt load, but it won't pay it all off.

With Intelsat not looking likely to emerge from this process still with a $9 billion loadstone tied around its neck, the analyst concludes Intelsat stock is close to fairly valued at its current share price of $3 and change, and unlikely to go up very much more.

Agreeing with the analysis, investors are selling Intelsat stock today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.