Despite more cost pressure than ever on European pay TV broadcaster Sky, its shares touched a new high yesterday as investors remained optimistic about the group’s future.
Shares rose 3.18 per cent to 1,005p on the London Stock Exchange, even as Sky prepares to swallow a huge £4.2bn bill to hold on to its Premier League football rights, a £7bn bill to fund the acquisitions of its two European sister companies and faces intense competition on all fronts from BT.
The rise came after Citi published a note on Sky promoting it to its Focus List Europe, on the back of its new European footprint, and raised its target price for the group from 1,075p to 1,200p.
“With the [English Premier League] outcome behind us, we think investor focus will return to the fundamental outlook for Sky, its strategy and underlying growth potential,” wrote Citi analyst Thomas Singlehurst in the note.
“We take the opportunity not only to completely rebuild our model – factoring in the German and Italian operations and making a first attempt at modelling mobile in the UK – but to fundamentally reassess the investment case for the group. The findings are encouraging.”
The last time Sky’s shares topped 1,000p was in early 2001. Back then Sky paid just £1.1bn for all 66 live Premier League games available for broadcast.