Financial Trading Blog
Stock of the day 20/04/2015 – Sky PLC
After relatively small amount of gains in 2014, from £8.47 at the start of the year to £8.99 to the end, Sky’s growth has been much more robust in 2015. Opening the New Year at £9.04, the company quickly hit a low of £8.61 in the first week of January. However, since then Sky has been fairly consistent in its gains, reaching a high of £10.56 last Thursday; it is now trading marginally lower at £10.51.
(Source: IT-Finance.com 20/04/2015)
All of the big news surrounding Sky of late has been in regards to acquisitions, be it by Sky or for Sky. Undoubtedly the most significant news was Sky’s Premier League deal announced back in February; paying £4.176 billion out of the overall £5.1 billion deal with BT, Sky will end up spending around £11 million per each of its 126 games for the three seasons from 2016-17. On top of this Sky acquired Sky Italia and Sky Deutschland, raising the company’s total net debt to £6.5 billion. Finally, Sky is also looking to launch its own mobile service, in partnership with Telefonica UK, at some point in 2016, in an attempt to match its rival BT’s four quadrant movements.
The worry for Sky is that this increase in debt is already being filtered down to its customers, customers who are beginning to find Sky’s television content in cheaper and more convenient forms elsewhere. It is here the important of Sky’s Premier League bid is highlighted; it is what separates it from the televisual upstarts that have appeared on the scene.
Yet, the takeover talk was not only in one direction. Companies like Vivendi, Liberty Global and Vodafone have all been rumoured to be making bids for Sky, which only increased its attractiveness through its own Premier League and European acquisitions. However, M&A talk is all the rage at the moment, so it can be hard to ascertain the veracity of these claims.
Overall, the expensive, if attractive, movements Sky has been making has caused a tentative approach from analysts, who have given the company a consensus rating of ‘hold’ with an average price target of £9.49.
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