Despite being a World Cup year, 2018 ended up as a disappointment market-wise. Having hit a 12 month peak of £1.84 at the height of summer, the stock found itself really struggling in the back half, eventually closing at a 5 and half year nadir of £1.25.
2019 hasn’t seen much of a recovery, yet at least, with a brief trip to £1.40 in early January quickly undone. ITV (LON:ITV) PLC now sits at a current trading price of £1.33.
November’s third quarter update was, at this point, pretty standard for the company. As expected, total external revenue rose 6% to £2.257 billion for the 9 months to date; that breaks down as a mild 2% increase in advertising revenue, alongside a muscular 10% surge at its ever-growing Studios division. Total viewing across ITV Family and ITV Hub was up 5%, in large part thanks to the 37% increase in time spent on the latter.
It is interesting to note, and arguably important for ITV’s future, that the 2 major sides of its business are gradually approaching parity. Advertising revenue was at £1.5 billion, while at Studios it was £1.1 billion; still, admittedly, a sizeable gap, but one that could be closed before long given the differing directions of both divisions.
Speaking of those differing directions, ITV said that due to the ‘increasingly uncertain economic environment’ – what firms say in place of Brexit – it expects total advertising revenue in the fourth quarter to ‘be down around 3%’, with a pronounced 6-8% decline in December. That’d leave it broadly flat over the full year.
The actual state of its full year performance is likely going to be down to its showing over Christmas. As for the reaction on Wednesday, investors are going to be morbidly curious to see what ITV is expecting from its financial 2019, with some tough comparatives in store considering something like the Rugby World Cup isn’t as big a draw as its football counterpart.
ITV PLC(LON:ITV) has a consensus rating of ‘Hold’ alongside an average target price of £1.83.
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