Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

ITV shares could fall over ad sales ahead of H1 earnings

ITV continues to see its share price slide as advertising revenues fall amid threats of a ban on junk food ads, with investors able to see the full extent of the damage when ITV delivers its half-year results on Thursday.

ITV continues to see its share price struggle as advertising revenues fall further amid threats of a ban on junk food ads before the 9pm watershed, with investors eager for an update on the broadcaster’s performance when it unveils its half-year (H1) earnings on Thursday 6 August.

Industry experts have warned that the ban, if approved, could potentially cost ITV up to £100 million in lost advertising revenues, adding to the mounting losses the broadcaster has had to bear amid the Covid-19 pandemic.

Cutting costs, suspending dividends and halting production amid Covid-19

The coronavirus outbreak has taken its toll on ITV Studios, with the production unit forced to halt shooting its various shows, leading to hundreds of staff being furloughed.

The broadcaster was also forced to suspend its dividend and significantly cut capital expenditure in order to shore up its balance sheet so it can weather the economic fallout from the crisis.

Unsurprisingly, many analysts are expecting ITV’s upcoming results to disappoint investors. However, analysts at Deutsche Bank upgraded ITV to a ‘buy’ rating ahead of its latest earnings and upped their price target from 80p to 120p per share, implying a potential upside of 103%.

‘Traditional media formats including TV and Print have come under significant structural pressure over the past few years as consumers have moved online and advertisers have followed suit,’ Deutsche analyst Nizla Naizer said in a note.

‘However, TV has fared better than its print peers and, with enough content and digital avenues of their own to keep their viewers engaged, should be able to maintain their not-insignificant share of the advertising pie going forward,’ she added.

ITV is trading at 59p per share at the time of publication, with the stock 60% down year-to-date.

ITV: outlook for 2020

Based on the myriad of challenges the broadcaster is facing this year, it will be interesting to see if the company has to downgrade its 2020 financial guidance.

At the start of the year, ITV forecast total advertising revenue to grow by 2% in Q1, despite early indicators suggesting that total ad sales would be down 10% in April – they ended up falling 42%.

In March and April, ITV saw a significant reduction in travel advertising as a result of the coronavirus pandemic. However, despite ongoing economic uncertainty due to Brexit, the British broadcaster said that ITV Studios will deliver revenue growth over the full year.

‘Over the medium term we continue to expect that ITV Studios revenues will grow by at least 5% CAGR with a 14%-16% margin,’ the company said in a statement.

ITV plans to deliver double digit growth in online revenues and growth in direct-to-consumer in 2020.

‘We are making good progress in each area of our strategy and our investments in data, technology, online and in streaming will enable ITV to be a sustainable, diversified and structurally sound digital media and entertainment business,’ ITV CEO Carolyn McCall said before the start of the 2020 financial year.

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  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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