Barclays upgrades ITV to 'overweight'

More broadly, the banks said European broadcasters are almost universally unloved by investors who believe that the change in consumption patterns from linear to on-demand will result in dwindling ad revenues.

"While consumption has indeed changed dramatically, ITV's ad revenues have grown at 2% since 2010, and we think 2022E shouldn't be different, with Q1 ad trends well above expectations and media buyers putting TV ad growth at 4%," it said.

"We also believe that ITV will disclose the split of ad revenues between linear and on demand at their FY21 results (3 March), demonstrating that part of their core business is growing."

Barclays also said there is "significant" M&A optionality and the studios could be re-evaluated by investors if management delivers on their 5% annual revenue growth target.

"Finally, ITV is arguably inexpensive on 8x P/E and 11% estimated free cash flow yield.

"These are the five reasons (short-term ad trends, better ad disclosure potentially changing the narrative, M&A optionality, Studios, valuation) why we upgrade ITV to overweight.

"ITV is our non-consensual value call for 2022."