Sky Deutschland rated ‘BUY’

Investment bank UBS has upgraded its target share price on pay-TV operator Sky Deutschland from €7.50 to €8.50. This is another major vote of approval from UBS, which less than two years ago was rated a ‘Buy’ by UBS and given a target price of $4 a share (and when Sky’s price was just €3.16 a share.

Sky Deutschland achieved a record ‘high’ price of €7.88 on Nov 12, so perhaps the €8 target price from UBS isn’t too much of a risk. Two weeks ago we reported on another slice of advice from another banker (Morgan Stanley) which suggested that Rupert Murdoch’s 21st Century Fox might be about to make a move to consolidate its existing 54.5 percent holding in the broadcaster and to “cement its grip” on the company.

UBS, Morgan Stanley and others see Sky Deutschland enjoying the sort of business and growth opportunities, and freedom from regulatory challenges that its UK cousin (Sky UK) can only dream for. Besides, 21st C Fox has the cash in hand. When Fox was floated out of News Corp in June it had some $8 billion of cash in its war chest, and an annual free cash flow of around €4 million.

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