ITV PLC (LSE:ITV) will be posting its first half results tomorrow and will be hoping to build on the solid performance in its first quarter results.
The British TV network reported better than expected advertising revenue in the first three months of the year, up 15%, 20%, and 15% for January, February and March.
Despite this positive set of results, analysts at Barclays maintained their neutral guidance on the stock, stating it was too early to be constructive on ITV.
Barclays went further to say that the stock will only be a buy if investors believe the UK will avoid recession.
For the upcoming quarter, therefore, total advertising revenue is expected to be down by about 6% compared to last year, which was boosted by the football European Championships.
Half-year advertising revenue, however, is expected to be 5% higher compared to 12 months prior.
Investors will also be looking out for whether it remains on track to deliver its cost-saving target, which is £17mln for the year.
Additionally, any news surrounding changes to advertising breaks and what this could mean for advertising revenues could spell good news for the share price, which is down 35% in the year so far to 71p.
Earlier this month, Ofcom said it was launching a review in light of evolving viewing habits and the rise of streaming services.
“The market doesn’t seem to have cottoned on to the potential for ITV to earn a lot more money in advertising revenue," said analysts at AJ Bell.
“Having longer ad breaks could certainly move the dial for its earnings. We’ll find out later in the summer when Ofcom updates on its review.”