Shares in broadcaster ITV have been gently gaining ground over the last few months despite the wobbles in the wider UK stock market. How so? Part of the story for the ITV share price has been the help it has received from analysts who have gently raised their earning forecasts rather than cut them. Analysts think that advertising spend for ITV may come in higher than expected in 2018.

ITV share price – can McCall save this dinosaur?

After a mid-single digit drop in advertising revenues in 2017, analyst have penciled in -2% for 2018, but some are now suggesting the market may come in flat. There are a number of arguments that can support this, including the resilience of the UK economy and the prospect of the UK World Cup football in Russia this summer.

“This will be Dame Carolyn McCall’s first chance to address ITV shareholders in her new role of CEO, after a very successful stint in the top job at easyJet,” comments Russ Mould, investment director at AJ Bell.

Analysts are expecting a pre-tax profit of £741 million with a small increase to £757 million in 2018 with a dividend of 7.83p. ITV also paid a 5p/share special dividend in 2016 it must be remembered. Several other special dividends have been paid since 2012 but Mould says he does not expect one this year.

The market is obviously firmly focused on the dividends ITV is going to pay out, but our long term concerns about the ITV share price, voiced last time we wrote about this company, still remain.

Strategic problems are not going away for ITV stock

ITV has to compete against a proliferation of digital offerings, among them Netflix and Amazon, but this is a market that is becoming more crowded by the month. The ITV share price is a long way from where it was back in April 2017. Investors should not ignore the fact that more advertising is migrating to digital platforms like Google and Facebook. We still think that the world of broadcasting is changing around ITV – McCall will need to come up with something truly revolutionary to make ITV shares a buy for us and a 5p special dividend is not going to be it.


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Commodities and Shares Editor
26th February 2018
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