ITV PLC (LON:ITV) should see “three stages of advertising recovery” in 2021 according to analysts at Barclays, who raised their target price on the stock to 125p from 115p following its final results on Tuesday.
In a note on Wednesday, the bank also retained its ‘equal weight’ rating on the stock, estimating that over the current year the FTSE 250 firm should see advertising growth of 8% from previous estimates of 6%, with the two -year run rate to improve to around -5% in April from between -10% to -8% in January to mid-March as pandemic restrictions were eased in the UK.
READ: ITV has most programmes back in production as BritBox counts 2.6mln subscribers
Barclays also justified its equal weight rating by highlighting the broadcast division, which it said it currently at seven times enterprise value to earnings (EBITDA), which they said “seems fair for flat revenues but expensive for declining revenues”.
“This is the main reason behind our Equal Weight. We increase our price target to 125p owing to higher estimates in our forecast years”, Barclays said.
The bank was not the only broker to increase its target price for the broadcaster on Wednesday, with Berenberg raising its own ITV target to 112p from 95p while JP Morgan hiked theirs to 165p from 145p and Societe Generale raised their target to 150p from 112p.
In its results for 2020, ITV reported that total external revenue was down 16% at £2.7bn, with ITV Studios down 25% because of disruption in production and broadcast down 8%, with pre-tax profits shrinking by more than a third to £325mln.
ITV shares were down 5.9% at 119p in late-morning trading on Wednesday.