Pay-TV giant Sky (SKY) beats expectations with its interims. Earnings per share are up 10%, the dividend is hiked 2% to 12.6p and 205,000 new customers are added in the second quarter – its strongest second quarter performance in a decade.

The market is impressed – marking the shares 3.3% higher to £10.75. Even the potentially controversial re-appointment of James Murdoch as chairman seems to be received without too much fuss, although it's likely to spur further gossip that father Rupert is again looking at making a move on the group.

The numbers draw contrasting views from analysts.

Sky figsShore Capital’s Roddy Davidson sees enough in the results to upgrade his recommendation on the stock from ‘hold’ to ‘buy’ and comments: ‘We are encouraged by the progress detailed in these results and positive on Sky’s business model and strategy. We expect top-line progress to be fueled by a combination of growth in existing and new customers (reflecting the strength / increasing depth of its content proposition), connected boxes, complementary non-subscription services and (although some challenges must be overcome) the long-term potential within the German and Italian markets.’

Investec’s Steve Liechti occupies the middle ground with a ‘reduce’ recommendation and puts his price target under review. ‘We remain negative mid-term given competitive pressure though Sky looks relatively steady,’ is his take


A long standing bear of Sky, Liberum’s Ian Whittaker stays at ‘sell’ with an ultra-bearish 530p price target. His main area of focus is ARPU (average revenue per user) which he notes has not increased in the UK for five quarters.

He comments: ‘As investors shift from viewing Sky as a growth story and focusing on their customer addition KPIs, and begin to focus on EPS growth, they will find it is not growing at a rate to justify the current fullyear 2017 price to earnings of circa 20-times.’

Issue Date: 29 Jan 2016