Financial Trading Blog
Stock of the day 25/07/2016 – ITV PLC
Even before the recent volatility ITV was having a pretty dire 2016. From a starting price of 2.74, mere pence below the company’s all-time high, ITV fell into a rather sustained slump, a stark contrast to its stellar performance from the past 4 years. By the end of March the stock was firmly hovering around the £2.40 mark; 3 months later and ITV’s losses became more dramatic, the Brexit referendum causing a 20% plunge on the day of the results. That briefly left ITV at a 3 year nadir of £1.41, though the company has been steadily recovering since then, now sitting at a current trading price of £1.90 (IT-Finance.com, 25/07/2016).
(Source: IT-Finance.com 25/07/2016)
Much of ITV’s downward trajectory has been fuelled by its pair of 2016 updates. On the face of it ITV’s full year figures back in March were fantastic. The company announced a special 10p per share pay-out thanks to a 6% rise in dividend, an 18% surge in pre-tax profits to £843 million AND a 15% increase in revenue to £2.97 billion. Yet the stock still fell by 7%, the news that ITV’s audience share had dropped 3% across the year that inducing such investor-hostility.
The company’s first quarter figures in mid-May were similarly strong, yet once again provoked a negative reaction from the market thanks to comments from CEO Adam Crozier about pre-Brexit uncertainty. Total revenue jumped by 15% to £755 million for the 3 months to the end of March, stagnation in its TV revenue countered by a 44% surge in turnover from its production division.
In terms of ITV’s interim report on Wednesday analysts are expecting the media firm to post a 4% fall in revenue to £1.47 billion thanks to a decline in advertising sales both on TV and online, a trend that will likely only intensify as the year continues and the Brexit fallout begins to pinch companies’ marketing budgets. In something of a silver lining ITV’s profits are meant to be more stable, however, the expected £410 million for the first half leaving the company on track for a 7% full year rise to £900 million, while the company will have the added bonus of Euro 2016 to bump up its viewing figures.
ITV PLC has a consensus rating of ‘Hold’ with an average target price of £2.57.
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