Sky Network Television Ltd [SKT.NZX] has been a major beneficiary of the strong NZ dollar over the last year or so and recently the dollar has been very strong vs the US dollar, the currency SKT buys its programming in, and the share price has responded in kind.
The share price has risen 13% since December 2010, around half of that over the last month or so, and its current share price as at 19 April 2011 of $5.75 looks fully valued based on recent results.
The current share price must be put in context of a 52 week high of $5.90c and a 52 week low of $4.51.
In order for the share price to break out of the 6 buck range the NZ dollar would have to sustainably push above the 80c mark against the US dollar and it is anyones guess whether that will happen.
If we focus on financial performance for the medium term things are looking good for the company, with new technology offerings giving Sky more reasons to extract additional revenue from current subscribers and also pull in new punters.
I couldn't have been more wrong back in April 2008 when I thought the company would come under pressure from new technology from competitors biting at the company's monopoly. SKT managed to grab the technology for themselves while potential competition has been left well and truly in the dust.
The combination of medium term revenue and profit increase looks good for the company but the impact of currency movements against SKT will clearly have a big impact on the bottomline.
Wait for a pullback from current prices if you are looking to buy.
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