Are ITV's Results Worth Watching?
Spreadex | Feb 22, 2018 10:47
2017 was not a kind year to the media firm. Initially things went quite well, with ITV climbing from a starting point of £2.08 to an 11 month high of £2.20 towards the end of April. From then on, however, things got a lot dicier for ITV, with the stock eventually hitting a post-Brexit nadir of £1.46 at the end of November.
It did rally slightly before the year was over to close out 2017 at £1.66, yet even at that price ITV still saw a 20% decline over those 12 months. Since 2018, began its struggled for any kind of firm direction, ranging between £1.60 and £1.70; ITV PLC now sits at a current trading price of £1.69.
Last November’s third quarter report captured why investors have been turning over the channel on ITV, though its statement was better than some of its previous releases. For the 9 months to 30th September total external revenue slipped by 1% to £2.1 billion, with net advertising revenue falling 7% – it was down just 4% in the third quarter specifically – as ITV claimed ‘wider corporate confidence in the UK continues to be impacted by political and economic uncertainty’. ITV Studios remained the company’s main highlight, with the division seeing a robust 9% leap in revenue to just over £1 billion, a rise that helped ease the impact of the advertising slowdown.
In terms of Wednesday’s results, the focus will likely remain on net advertising revenue. ITV are expecting NAR to actually rise 1% in the fourth quarter, but with a 5% decline across the full year, a figure that the firm claims is still ‘outperforming the total TV ad market’.
The update is also notable for being the first under new CEO Carolyn McCall, so any shift in strategy or idea of what her tenure will look like will be appreciated by investors. Already McCall has shaken up the way ITV has been negotiating with Virgin Media about the price the cable operator will pay to carry the channel, eyeing a broader deal that should still see the firm paid more for the overall package.
ITV PLC (LON:ITV) has a consensus rating of ‘Hold’ alongside an average target price of £2.04.
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