Market report: Sky high as traders shrug off Netflix threat

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Analysts at Morgan Stanley today urged investors to tune into Sky and ignore claims that the pay-TV giant is suffering from the rise of upstarts Netflix and Amazon Prime.

The US investment bank upgraded its rating on the TV, phone and broadband group to Overweight — the first time it has done so in four years — helping the shares to rise 20.5p to 860.5p.

It claimed that the FTSE 100 company — which has shed a quarter of its market value this year amid concerns about cheaper online rivals — has managed to grow customer numbers, and boost revenues and profits by 5% in the past two years even with Netflix competing for business.

Analyst Patrick Wellington predicted earnings would accelerate to around 13% a year after 2017.

He also hinted at an “outside chance” of a takeover. “There is always the possibility of a renewed bid by Fox, which owns a 39% stake in Sky.” Fox bid 700p a share in 2010.

The analyst warned that he would be forced to downgrade his forecasts if Sky wins back the Champions League rights from BT in the upcoming auction — to be held near the end of the year — given the huge sum it would have to splash out.

The markets started the week on the front foot, with the FTSE 100 up 93.61 points at 6803.89 thanks to a rise in oil — Brent crude was up 49 cents, or 1%, at $46.26 a barrel — and industrial metals, including copper.

It helped miners to surge, with Anglo American up 35.6p at 850p and BHP Billiton rose back above 1000p — up 35.9p to 1022p.

Glencore, 6.4p better off at 191.4p, received an added boost from Credit Suisse, which upgraded its shares to Outperform as it predicted the company, which has been dumping assets to pay down debt, would start paying dividends again “from early 2017”.

A rise from the gold price to $1317 per ounce meant a winning return to the FTSE 100 for Polymetal, which replaced housebuilder Berkeley Group on the top flight today. The shares improved 36p to 1048p.

On AIM, investors chased Argentinian oil company Andes Energia 0.56p higher to 15.31p as it hired BT chairman Sir Michael Rake as a director and revenues edged up to $34.2 million in the first six months of the year.

Finally, AIM adtech firm Adgorithms dived 5p further to 21p as it revealed first-half revenues fell from $12.3 million to $8.7 million amid a troubled online ad market. It floated in June last year at 133p per share.

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September 19, 2016 |
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