Berenberg lowers ITV to 'sell', halves target price

Berenberg said while forecasts have fallen following the announcement of additional investment in ITVX, consensus still expects "modest growth" in advertising revenue in 2023, despite the fact that there no major international football tournament will take place next year, high fat sugar and salt advertising restrictions will come into force and the fact that it expects advertisers to continue shifting out of linear TV, which remains the vast bulk of ITV's advertising revenue.

"On our below-consensus estimates, ITV trades at 10x 2023 P/E, which is a substantial premium to other broadcaster peers," said the analysts, who also halved their target price on the stock from 128.0p to 64.0p.

The German bank also noted that although it understands why ITV feels the need to invest more in its online strategy, it views management's assumption that it will not negatively affect linear consumption as "unrealistic.

"Meanwhile, the extra content spend that ITV has announced, while significant for ITV, is miniscule when compared to the budgets of the streaming giants, some of which are already shifting to an advertising monetisation strategy," added Berenberg.