Stock of the day 03/03/2015 – ITV PLC

2014 was a tale of two halves for ITV PLC, but there are plenty of positive signs ahead of its full year earnings release on Wednesday.

After big gains in 2013, things weren’t so great for ITV at the start of last year. It started 2014 at £1.94, but a slow decline in the first 6 months of the year ate into this price, seeing the stock reach yearly lows of £1.69 in both May and June. However, ITV saw big gains in mid-July, jumping around 13% from £1.77 to £2.07 in the space of a few days following talk that Liberty Global would make a move for the company.

Whilst nothing came of these rumours, ITV managed to hold onto this growth, eventually reaching its 2014 peak price of £2.22 at the start of September after fresh reports that Vodafone would make a bid for the television giant. The failure for anything to materialise once again caused the stock to remain fairly flat from this point onwards, opening 2015 marginally lower at £2.16. Yet since then ITV kicked into gear, reached a fresh high of £2.35 at the end of February; a slight slip now sees the stock trading at £2.24.



Since CEO Adam Crozier’s 2010 appointment has been a big boon for the company, with a 332% rise on the markets during his tenure. Crozier announced strong revenue growth in November’s interim statement, stating that full year advertising revenue should be up 5% alongside £100 million in growth for its ITV Studios section. Investors should also expect reports on the company’s latest ventures ITVBe and ITVEncore (its first pay channel), both of which launched last year.

Looking ahead to the rest of the year, ITV paints a mixed pictured. The second season of its smash hit series Broadchurch, mentioned by Crozier in that November statement, failed to match the success the show had first time out both critically and with viewers. This is a blow to ITV, a channel that often struggles to have the same zeitgeist-grabbing, critically adored output of the BBC or Channel 4.

It is also struggling with the lucrative Saturday night slot, as former mega-show The X factor begins to show signs of age, consistently losing the ratings battle it has with the BBC Strictly Come Dancing. Perhaps the biggest blow, at least in terms of advertising revenue, is the upcoming loss of the Champions and Europa League rights. Whilst BT Sport won the bid in 2013, it will go into effect from next season, and may affect ITV’s forecasts for 2015.

There is some good news. Rumours are circulating that ITV is in talks to buy Talpa Media, the company behind BBC’s (attempt at a) flagship show ‘The Voice’; if these reports come to fruition, it will be points scored for ITV against its biggest rival. On top of this comes the Rugby World Cup in September, with ITV being the sole UK broadcaster of the tournament.

This mixed set of news has led analysts to give ITV a narrow consensus of ‘hold’, calculated from 2 ‘sell’, 8 ‘hold’ and 11 ‘buy’ ratings. Alongside this is a 12 month target price of £2.36, just above the highs it saw last week.