Macquarie upgrades Sky and names it "top pick"; downgrades BT, TalkTalk

(ShareCast News) - Macquarie upgraded Sky to 'outperform' from 'neutral', raised its price target to 1,400p from 900p and named the stock its top pick in the UK.The bank said that in general across Europe it favours premium operators that are investing in networks and that are indirect beneficiaries of consolidation, and challenger operators with a distinct market segment.It said that in the UK, BT is at risk from under-investing and is also exposed directly to M&A risks. "As such, we view Sky as the premium UK operator, with pricing power in content and indirect benefits from consolidation. It can also economically discount telecoms to the detriment of BT and others."Macquarie cut its stance on BT to 'underperform' from 'neutral' with an unchanged price target of 375p and on TalkTalk to 'neutral' from 'outperform', raising the price target to 365p from 350p.The bank said it was positively biased towards TalkTalk but struggling with current valuations. As for BT, it said its outlook on the stock is negative as it is on the back foot currently facing M&A execution risks, convergence headwinds, competition in the Mobile Virtual Network Operator market, pressure on its fibre business and significant regulatory hurdles.It kept Vodafone at 'neutral' with a 235p price target.At 14:30, Sky shares were up 0.7% at 1,143p, BT was down 0.9% at 465.30 and TalkTalk down 5% at 337.80p.