UBS has revised its price target for ITV PLC (LSE:ITV) downwards from 76 pence to 73 pence due to increased marketing and labour costs.
The investment bank, which retained its 'neutral' recommendation, has also adjusted its earnings per share (EPS) projections for ITV for the fiscal years 2024 to 2026, reducing them by approximately 4%.
This decision reflects the necessity to account for an approximate 4% rise in other cost assumptions at ITV, driven by escalated marketing efforts and higher wages in the sector.
The analysis from UBS also discusses ITV's advertising revenue forecasts, with an expected 3% increase in total advertising revenue (TAR) in the first quarter of fiscal year 2024, underpinned by robust market conditions.
The second quarter outlook is more optimistic, with TAR predicted to rise by 5-8%, benefiting from a weak comparison to the previous year’s decline and anticipated revenue from the European Football Championship.
However, challenges are expected in the third quarter as ITV does not hold broadcasting rights for the Olympics and will be comparing against a period that included the Rugby World Cup. This is anticipated to result in a 2% decline in TAR.
Overall, UBS’s adjustments to ITV’s financial outlook reflect the broader economic pressures such as inflation and increased operational costs impacting the media sector, with direct effects on ITV’s financial health and market valuation.
The shares were down 0.8% at 70.55p.