Thursday March 27, 11:42 AM
STOCKWATCH BSkyB higher; Dresdner Kleinwort upgrades to 'hold' ahead of Q3
LONDON (Thomson Financial) - Shares in British Sky Broadcasting Group PLC gained in late morning deals after Dresdner Kleinwort upgraded its recommendation to 'hold' from 'sell' and hiked the price target to 570 pence ahead
of the media group's third-quarter results.
At 11.23 am, BSkyB (LSE: BSY.L - news) shares were 17 pence higher at 566-1/2 -- a gain of 3.1 pct, while the FTSE 100 index took on 46.90 points at 5,707.30.
In a research note out today, Dresdner Kleinwort said ahead of BSkyB's third-quarter results, due April 30, it has tactically raised its target price to 570 pence from 470 and upped its rating.
The broker said it sees upside risks to subscriber expectations this quarter, given positive churn trends and market research evidence that demand has ebbed back towards Sky in the third quarter.
It (Frankfurt: A0MLX5 - news) said it sees churn rising to a maximum of 10.4 pct in the third quarter from 10 pct in the previous quarter and, taken together, forecasts 80,000 net adds in this quarter compared with early expectations of around 50,000-75,000.
The broker added that it has raised its net adds forecasts for the second half to 170,000 from 136,000, which pushes its 2008 EBIT forecast up by 2 pct to 769 mln stg.
With regulation becoming a longer-term issue and the stock down 23 pct from its high, Dresdner Kleinwort said it sees the risks as more balanced at these levels.
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