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ITV to take spotlight on Wednesday as updates arrive from several blue-chip firms

Tobacco firm Imperial Brands and insurer Direct Line are also scheduled to report at the mid-point of the week
ITV flag
Investors will be keeping an eye on the broadcasters advertising revenue, which is expected to fall 4% in the first quarter

Advertising revenue will be taking centre stage when FTSE 100 broadcaster ITV plc (LON:ITV) delivers a first quarter trading update on Wednesday, with investors watching closely for any deviation from the predicted drop of 4%.

There has been a glimmer of hope, with some analysts pointing to a read-across from Scottish broadcaster STV, which reported a better-than-feared drop in national advertising revenue in its own first quarter update on 23 April.

READ: STV first quarter numbers provide “positive read across” for ITV, says Liberum

Aside from advertising, investors will also be keeping a close eye on the group’s content production arm, ITV Studios, as the group is attempting to wean itself off its reliance on advertising in favour of producing content for license.

Any updates on ITV’s new partnership with the BBC to launch Britbox, a joint-streaming venture that was announced earlier this year, will also be eyed.

Direct Line navigates uncertain motor pricing and FCA probe

Direct Line Insurance Group PLC (LON:DLG) issues a trading update on Wednesday ahead of its AGM, with shares down more than 11% since going ex-dividend in early April, with investors also concerned about the Financial Conduct Authority’s pricing investigation, which has seen the regualtor putting pressure on insurers ahead of the release of its findings.

This has contributed to a softer motor insurance pricing backdrop, with claims elevated and companies’ margins under pressure, UBS said, which downgraded its rating on the shares to ‘neutral’ ahead of the results due to “an increasingly uncertain motor pricing and FCA investigation backdrop”.

Numis expects a “modest” decrease in premium income and flat policy numbers overall as small growth in motor is offset by reductions in home and other.

Imperial Brands earnings to fall on poor tobacco revenue

Cigarettes maker Imperial Brands reports its first half numbers on Wednesday and analysts at UBS expect a “relatively weak” reading.

UBS said it sees tobacco revenue declining marginally below the 1% “normal” level due to a 1% headwind from a difficult comparison in the US.

In vapour, the investment bank predicts revenue to rise 2.8% to £170mln at constant currency.

“We expect a £140mln year-on-year headwind on operating profit due to £40mln of sale gains last year and an incremental £100mn investment in next generation products this year. As a result, we expect EPS to be down 4% year on year.”

UBS expects Imperial Brands to reaffirm its targets for constant currency revenue growth at or above the upper end of its 1-4% guidance range and constant currency earnings per share growth of 4-8%.

Significant announcements expected for Wednesday May 8:

Trading updates: ITV plc (LON:ITV), Direct Line Group PLC (LON:DLG), JD Wetherspoon PLC (LON:JDW), Travis Perkins PLC (LON:TPK), SIG PLC (LON:SHI), OneSavings Bank PLC (LON:OSB), Rathbone Brothers PLC (LON:RAT), Apax Global Alpha LIMIted (LON:APAX)

Interims: Imperial Brands PLC (LON:IMB), Elegant Hotels Group PLC (LON:EHG)

Finals: CyanConnode Holdings PLC (LON:CYAN. Keystone Law Group PLC (LON:KEYS), Osirium Technologies PLC (LON:OSI), Smartspace Software Plc (LON:SMRT), Vertu Motors PLC (LON:VTU)

AGMs: Cello Health PLC (LON:CLL), Caledonia Mining Corp. (LON:CMCL)

Economic data: US MBA mortgage applications


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