Berenberg raises target price on ITV

Analysts at Berenberg raised their target price on broadcaster ITV from 95.0p to 112.0p on Wednesday but raised questions about the group's advertising revenues when "normal life" resumes.

While Berenberg said there were extra savings, extra investment and higher Britbox losses in ITV's full-year earnings, it believes that the real driver of the group's future profitability would be how advertisers respond to consumer freedom.

The German bank stated demand for advertising was "strong" in April, as advertisers anticipate consumer spending on categories like autos, non-food retail and travel, but noted that ITV would also equally benefit from the fact that next month, Britons will still be "mostly stuck at home watching television".

Berenberg added that if Boris Johnson's planned timetable holds up, however, consumers will be out and about this summer, and stated that the appeal of programmes like Love Island and football "may be less than anticipated".

"In such a scenario, we do not believe advertisers will allocate more money to in-home advertising (the cost of which will rise as viewership declines), but will rather increase marketing in out-of-home categories, which offer low ad prices and strong audience growth," said the analysts, who also reiterated their 'hold' rating on the stock.