Morgan warns on Sky concerns

Morgan Stanley has cut its rating on Sky from overweight to equal weight and lowered its price target for shares in the broadcaster.

The broker warned that Sky's exposure to advertising, betting, pubs and broadband content meant it was "operationally but not financially defensive". Recent moves such as heavily discounting its Sky+ HD service for new installs also caused concern that earnings may fall year-on-year, and there were even suggestions that its third quarter numbers may show lower net additions and higher churn.

Shares in the company fell back to 429.5p after the downgrade was confirmed but are presently trading at 435p. Morgan Stanley's new price target is 460p, down 19% from its previous estimate.