ITV's shares slide as Deutsche Bank cuts target price

Deutsche Bank (DB) cut its target price to 185p from 200p and reiterated a ‘sell’ rating for ITV after the broadcaster reported its first quarter results.

The bank said ITV’s first quarter results were even worse than lowered expectations.

ITV reported flat advertising revenue in the first three months of the year. The company expects it will continued to be flat the first half, blaming uncertainty ahead of Britain’s referendum on European Union membership on 23 June.

“This is not a temporary Brexit blip,” DB said.

“On a day when Facebook is reported to be set to overtake Channel 4 in ad revenues in the UK, and we estimate has already overtaken ITV in online video (consensus forecast +3%), consensus ad growth from 2017 needs to be cut too.”

Overall, however, revenue rose 14% to £755m in the first quarter, as non-advertising revenue was increased 34% to £428m.

ITV studios revenues jumped 44% jumped to £322m, driven by the acquisition of other production houses .

Chief executive Adam Crozier said ITV has a healthy pipeline of new and returning programmes, including Victoria, Cold Feet, The Voice and Alone, “which gives us confidence for the full year and into 2017”.

DB said ITV faces reinvestment risk as it needs to respond in programming and digital acquisitions.

“The stock is cheap versus history, but the world has changed,” the bank said, adding that there are higher quality US peers with better content.

Shares fell 2.71% to 204.30p at 1046 BST.