ITV shares cheap but 'no momentum' worries Barclays

ITV's results did not offer many positives for Barclays, which downgraded the shares and cut its target price.

Barclays, which moved to an 'equal weight' rating and lowered its price target to 180p from 200p, said results for 2017 were "only in line, unlike previous years" and with the end of its previous special dividend as management want to keep some headroom for M&A.

Moreover, financial pointers for the 2018 and 2019 led the bank to cut its forecasts, with £25m higher programming cost due to sporting events, 5% organic growth in Studios, £35m of adjusted net interest, an adjusted tax rate of 19%, £100m capex, £85m of cash exceptionals and £80m of pension deficit funding.

"Furthermore, ITV new CEO Carolyn McCall’s strategic refresh might end up being eminently sensible but we won’t know its financial impact until, at best, interim results (end of July) or until September’s investor day.

"This creates uncertainty and the fear of re-investment is an overhang," analysts wrote.

Yes, they acknowledged the shares are inexpensive at 11.5 times 2018 forecast earnings, which is "arguably" discounting a 4% TV advertising decline forever, "but valuation without momentum almost never works in European media".

Analysts said that unless advertising accelerates significantly from June onwards, they "struggle to see where momentum would come from".