The bank has downgraded its rating for the FTSE 100-listed firm to ‘hold’ from ‘buy’, whilst reducing its target price to 215p from 230p to reflect ex-dividend factors.
In early morning trading, shares in ITV - which is behind commerical hits such as Broadchurch and Downtown Abbey - were 0.6%, or 1.2p lower at 194.5p.
HSBC also cut its 2017 net advertising revenue contraction estimate from -2.9% to -6%, which drives a 3.7% cut in its group EBITA estimate and a 4.0% cut to adjusted EPS forecasts, with 2018-19 EPS forecasts reduced by 2.5%-2.6%.
In a note to clients, HSBC’s analysts said: “Operating momentum remains challenging as media buyers cite a further deterioration in TV ad trends, with weakness led by the key FMCG (fast-moving consumer goods) category.”
They added: “We are still within the -3.5% to -8% consensus range but consensus is gradually moving towards the lower end of that range.”
The analysts continued: “There is no consensus view (yet) among media buyers on whether the weaker momentum than previously expected is driven by a change in advertiser preference for performance marketing over branding campaigns (the latter is still the dominant reason to prefer TV’s mass-reach).”
They concluded: “The TV ad market continues to struggle to capitalise more strongly on advertisers’ concerns about fraud and ad viewability in digital.”