Financial Trading Blog
Stock of the day 15/04/2016 – Sky PLC
Can the company see a more sustained surge with its third quarter statement next Thursday?
Opening the year at £10.99 (just shy of a pound lower than last July’s all-time highs), Sky quickly suffered from the same start of 2016 sickness as the rest of the market, plunging to £9.99 within the first 3 weeks. Things did begin to pick up as January came to a close however, a strong half year report at the end of the month causing Sky to start February at £11.20.
(Source: IT-Finance.com 15/04/2016)
That update saw a £12 million fall in pre-tax profit (to £524 million) countered by the company’s continually robust subscription growth, adding 205,000 new customers in UK and Ireland and 120,000 in Germany and Austria in the second quarter alone. Sky also saw its highest ever first half operating profit, surging 12% to £747 million.
Yet whatever post-update gains it made were lost in dramatic fashion over the first week of February, Sky seeing an alarming 10% fall to £9.53, the company’s lowest price in around 12 months. Since then, bar a jump at the start of March, Sky has struggled to move much beyond the £10 mark, the company sitting at a current trading price of £10.08 (IT-Finance.com, 15/04/2016).
In terms of Sky’s third quarter update next Thursday, investors will be looking for the company to continue the stellar subscription surge seen in the UK and Germany. Sky will also be hoping that the muscular growth seen in those countries can bleed into the Italian market, the company’s performance in Italy lagging behind its European peers in the half year report, the country seeing a 3% fall in revenue to £953 million due to a declining customer base.
Sky PLC has a consensus rating of ‘Hold’ with an average target price of £10.92.
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