ITV PLC (LON:ITV) shares fell after Barclays downgraded the stock, saying it does not see many positives emerging from the broadcaster’s full year results.
The company on Wednesday reported a 5% decline in net advertising revenue (NAR) to £1.6bn at ITV Family – the division that includes its television channels – in the year ended December 31, 2017.
ITV said the economic and political uncertainty caused by Brexit had an impact on demand for TV advertising. The group, which produces 'I'm a Celebrity ... Get Me Out of Here', 'Downton Abbey' and 'Victoria', was also hit by tough competition from the growing popularity of video streaming rivals Netflix and Amazon.
READ: ITV reports drop in 2017 ad revenue but expects boost from FIFA World Cup in first half
In a blow to investors, ITV also pulled the plug on its five-year record of paying a special dividend.
In response, Barclays cut its rating on the stock to ‘equal weight’ from ‘underweight and lowered its target price to 180p from 200p.
The bank said the weak advertising trends in 2018 look likely to persist and while ITV is taking action to address its challenges, it will take some time for its turnaround efforts to bear fruit.
“CEO Carolyn McCall’s strategic refresh might end up being eminently sensible but we won’t know its financial impact until, at best, interim results (end of July) or until September’s investor day,” it said.
“This creates uncertainty and the fear of re-investment is an overhang.”
Unless advertising accelerates from June onwards, Barclays said it struggles to see where momentum can come from.
Barclays cut its forecasts for earnings per share by 1% to 15.5p in 2018 and by 4% to 15.7p in 2019.
Shares fell 3.5% to 154.35p around noon.