Stock of the day 27/01/2016 – Sky PLC

With BT breathing down its next Sky will be looking to soar with its latest half year results on Friday.

Things didn’t go exactly to plan in the aftermath of Sky’s Q1 2016 last year. Yet the figures were all there; a 10% rise in operating profit to £375 million was joined by a 6% surge in revenue to £2.8 billion. Customer growth, meanwhile, was just as healthy, with 43,000 new TV subscribers for the quarter, alongside an extra 133,000 broadband clients. The cherry on top? A ‘churn-rate’ of 9.8%, a figure that Sky claimed was its lowest for a decade. Initially the stock rose to a 2 month high of £11.22 following its results (released on the 20th October), only to fall back to £10.62 by mid-November.

However, the company was soon bouncing back, reaching £11.26 by the start of December following the unveiling of ‘Sky Q’, a new set-top box with a myriad of features designed for ‘media-centric consumers’. It’s a move designed to try and take on Netflix and Amazon Prime (both of who’s apps won’t be available on Sky’s latest device), and something investors took as a savvy move if the company’s subsequent climb is anything to go by.


(Source: IT-Finance.com 27/01/2016)

The erratic end to 2015, and the volatile start to 2016, then took its toll on Sky’s stock price; entering the new year at £10.99, by January 21st the company had struck an intraday low of £9.995, the first time the stock was below £10 since the middle of September. Since then Sky has rebounded slightly, aided by news of an exclusivity deal with Showtime, which makes the likes of the US Shameless, Homeland and the Twin Peaks revival. That, alongside Sky Atlantic, gives it another edge over BT’s TV offerings (with Sky’s rival reporting next Monday). Sky sits at a current trading price of £10.46 (IT-Finance.com, 27/01/2016).

In terms of its half years results on Friday, analysts are expecting a 6% rise in pre-tax profits to £620 million with another set of strong customer growth figures following Q1’s stellar additions. News on when its mobile phone network will launch would be a nice surprise; the earlier the company can cement itself as a quad-play player in 2016 the better, especially with BT’s EE deal getting final CMA clearance.

Sky PLC has a consensus rating of ‘Hold’ with an average target price of £10.45.