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Macquarie tunes out of ITV, downgrades to 'underperform' as mass advertisers being eroded by internet

“We argue the next decade will be harder than the past one for FTA [free to air] broadcasters, as new consumer models devalue the mass reach of TV advertising,” Macquarie said in a note to clients
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The broker also shaved its earnings per share forecast for ITV by 9% for 2017-18, pointing out that it is now at the bottom of the consensus range

Shares in ITV plc (LON:ITV) were lower in morning trade after the London arm of Aussie investment bank Macquarie downgraded the broadcaster’s stock to ‘underperform’ from ‘neutral’.

It also shaved its earnings per share forecast for ITV by 9% for 2017-18, pointing out that it is now at the bottom of the consensus range.

READ: ITV stock still not cheap enough to own amid weak TV advertising market, says UBS

“We argue the next decade will be harder than the past one for FTA [free to air] broadcasters, as new consumer models devalue the mass reach of TV advertising,” Macquarie said in a note to clients.

“We would turn buyers again for consolidation and a cyclical upturn, but first we need to see lower consensus estimates.”

The broker reckons ITV’s advantage as a mass advertiser is quickly being eroded by the internet and specifically ‘mass engagement on digital channels’.

What that means is companies are harnessing the power of Facebook, Instagram and Twitter to more clearly and precisely target buyers.

ITV may also struggle as the fast moving consumer goods firms continue to cut marketing budgets.

The FTSE 100-listed shares, off 3% earlier in the session, were down 1.2%, or 1.9p at 159.2p around 10am, with Macquarie maintaining a target price of 110p on the stock.

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