Sky shares drop after sell notes

Discussion in 'Market News' started by Lily, Jan 13, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
    Likes Received:
    Analysts point to growing competition and increased costs for broadcaster

    Despite a revival in the markets, satellite broadcaster Sky is missing out on the more optimistic mood.

    Its shares have fallen 10p to £10.93 after a couple of negative notes. Haitong Research has issued a sell note on worries about competition, not least in bidding for football rights. Analyst John Karidis said:

    We start coverage of Sky with a sell rating and an 875p fair value estimate. Consensus, we understand, expects earnings per share to change -4% in 2017 (mainly because TV rights costs on English Premier League football will rise 83%) and +20% in 2018.

    These estimates exclude Sky entering UK mobile in 2016. We think the current share price and consensus forecasts beyond 2017 are too high. BT and Ofcom look likely to increase pressure on Sky’s pricing power and costs in the UK (which will still generate around 76% of group EBITDA in 2018).

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