Credit Suisse repeats an 'outperform' rating on broadcaster ITV (LON:ITV) but lowers the target price following a lowering of expectations on advertising spend this year.
Media buyers have significantly lowered forecasts for 2016 to negative 3%, from negative 1.3% previously, notes analyst Sophie Bell.
Earlier this week, ITV announced plans to cut jobs due to economic uncertainty particularly after the Brexit vote and total advertising revenues across the industry are set to decline by up to 2%.
For ITV, Credit Suisse has lowered its net advertising revenue (NAR) growth forecast for 2016 to negative 3.3% from negative 1.4% and 2017 NAR to minus 6% from minus 3%.
The broker notes that ITV trades on 8.8 times' 2017 enterprise value to EBITDA (earnings before interest, tax, depreciation and amortisation), including the pension deficit.
But Bell says: "ITV's stronger balance sheet and reduced reliance on advertising revenues since 2009 makes this discount unwarranted, in our view.
"However, in an environment of negative ad momentum investors may choose to focus on multiples during historic downturns," she said.
The broker sets a price target of 210p, down from 240p previously.
ITV is due to report nine month results on November 10 and risks to the broker's call include a further unexpected downturn in the UK TV advertising market or a sudden shift in consumer behavior away from traditional TV, it said.
ITV shares are down 0.7% to 170.90p.