Sky PLC (LON:SKY) shares came down to earth a little after the strong gains yesterday following Comcast Corp’s. (NASDAQ:CMCSA) surprise £22.1bn bid move for the satellite broadcaster as one broker upgraded its rating for the stock, while another downgraded its stance.
In late morning trading, the FTSE 100-listed firm’s shares were up just 0.1% at 1,333p having jumped around 20% higher on Tuesday after Comcast tabled its 1,250p all-cash offer.
READ: Sky gets surprise £22.1bn cash bid from Comcast, trumping Rupert Murdoch's Fox offer
That a 16% premium to the already agreed 1,075p a share bid for Sky from Rupert Murdoch’s 21st Century Fox Inc (NASDAQ:FOX) which is still being probed by the UK competition watchdog.
Liberum Capital upgraded its rating for the pay-TV group to ‘buy’ from ‘hold’ and increased their price target for the stock to 1,250p from 970p on the back of the contested bid move.
In a note to clients, Liberum’s analysts said: “We expect this deal to go through as we do not think Fox (or Disney, who are acquiring the Sky assets as part of their purchase of various Fox assets) will want to get into a bidding war, especially given the complications surrounding Sky News.”
SocGen thinks shares up with events
However, analysts at French broker Societe Generale cut its rating for Sky to ‘hold’ from ‘buy, while moving their price target up to 1,330p from 1,250p, although they think Fox could still raise its bid.
The SocGen analysts said: “We had taken the view that Sky shares were trading significantly below fundamental value and that the threat of FAANGs’ globally-branded online platforms combined with a conducive M&A backdrop would drive a significant ‘bump’ in 21CF’s 1075p prevailing offer.
“But with one ‘bump’ now on the table, even though we nudge up our TP from 1250p to 1330p, yesterday’s 20% share price jump leaves them up with events.”