ITV gains as Goldman highlights M&A potential
ITV got a boost on Friday after Goldman Sachs added the buy-rated stock to its Conviction List, saying its is one of the most likely M&A candidates in its coverage, as it took a look at the European media sector.
FTSE 100
8,320.76
16:59 27/09/24
FTSE 350
4,599.36
17:10 27/09/24
FTSE All-Share
4,555.44
17:04 27/09/24
ITV
82.20p
16:40 27/09/24
Media
12,556.67
17:04 27/09/24
It noted the stock has been one of the worst performers in its sector coverage, down 19% versus the STOXX Media and down 31% versus the FTSE 250 in the last 12 months, mainly owing to Brexit-related issues.
The bank said that while political risks remain significant, the risk -reward is compelling. GS said it reckons company-compiled consensus already factors in a bear scenario, with -5% advertising growth for 2017.
GS’s top-down analysis, latest trends and retail results, as well as conversations with media buyers, point to better ad trends, leading it to revise its ad forecasts from -3%/-5% to -2.5%/-2.5% for 2016/17.
In addition, the bank highlighted the M&A potential given ITV’s content ownership and GBP weakness.
“We note that Liberty Global currently owns a 10% stake and its CEO recently noted in a press conference (January 6, 2016) that he sees free-to-air investments (such as the ones Liberty has done in Belgium/Ireland) as more attractive than buying studios, given European content is more fragmented and most of the viewership (70%) is still FTA in Europe.”
Finally, it highlighted an attractive valuation, with the shares at a 20% discount to their 10-year median and offering a 5% dividend yield.
At 1026 GMT, the shares were up 2.7% to 208.49p.