UK broadcaster ITV plc (LON:ITV) has been tipped to beat forecasts when it reports its full-year results on Wednesday.
City broker Liberum thinks the numbers will come in “slightly ahead of consensus” given its belief that December was “not as bad as feared”.
READ: ITV downgraded to 'hold' due to 'renewed Brexit uncertainty'
Analysts also expect that advertising revenue will be “slightly better” than the 6-8% drop ITV guided for back in November’s trading update.
They add that the new deal signed between ITV and Virgin Media last summer will likely boost the broadcaster’s bottom line by around £35-40mln a year.
Brexit impact not as great as feared
That’s all in the past, but as for what’s going on now, Liberum expects bosses to paint a brighter picture than some have suggested, boosted in part by the recent falling-out between Channel 4 and ad giant Publicis.
“For current trading, we would expect ITV to confirm that January and February combined have seen a rise in advertising revenues but that March advertising revenues are down year-on-year, in part because of the timing effects from Easter but also some Brexit uncertainty,” read a note to clients.
“However, our recent discussions have suggested March's advertising performance may be down more like c. 10%+ y-o-y rather than the >20% falls predicted by other analyst comments.”
Share buyback on the cards?
Liberum has also speculated that the “time might be right” for ITV, under its new finance boss Chris Kennedy, to launch a share buyback.
“We estimate ITV’s 2018 net debt will be c. £785mln, or <1x net debt / EBITDA and, with a potential sale of ITV’s HQ on the South Bank for a three-figure sum, ITV may feel it has flexibility to return some cash and send a signal it thinks its share price is too low.
“Even a limited return (e.g. £150-200mln) would send an important signal and would be low to mid-single digit accretive.”
Liberum ahead of consensus
is looking for revenue of £3.29bn (consensus: £3.20bn), underlying earnings of £923.6mln (£832.7mln) and earnings per share of 15.5p (14.9p).
Reflecting its bullish view and its above-consensus forecasts, the broker has upped its price target slightly to 260p (from 240p) and kept its ‘buy’ recommendation in place.
ITV shares were down 0.8% to 131.3p in mid-morning trading on Tuesday.