Since mid-August, the ITV share price has risen over 20%, storming ahead of a near-flat FTSE 100 Index. While the company's stock may look rather promising now, there are many factors affecting any decisions to invest in this business. In this article, we cover the basics of the company, find out how its stock has performed throughout the past few years and check out what the latest ITV share price prediction looks like.
The basics: what is ITV plc?
ITV plc is a UK-based media business that is known by many for a plethora of mergers and acquisitions it has had throughout its history. Headquartered in London, it is an integrated producer & broadcaster, which creates, owns and distributes content on various platforms around the world. ITV plc holds thirteen of the fifteen regional television licences that form the ITV network, the oldest and largest commercial terrestrial TV network in the UK, broadcasting to England, southern Scotland, Wales, the Channel Islands, the Isle of Man and Northern Ireland.
The company’s roots trace back to 1955, but it emerged in its current form in 2004 when Granada plc, a parent company of Granada Television, and Carlton Communications merged. This new establishment has created a single company from all the preexisting ITV franchises in England and Wales.
In 2010, a large-scale business reorganisation, known as the "five-year transformation plan", was launched. By 2012, the company had already achieved many of its goals, including an increase in audience share, a ranking upgrade from BB- to BB+ and a reduction of debt from £730 million in net debt at the end of 2008 to a positive £16 million in net cash in the first quarter of 2012.
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The company's business operations are divided into two divisions: ITV Broadcast & Online, operating the TV networks like the ITV News Group, and ITV Studios, comprising both the UK and international production, Global Entertainment and ITV's facilities businesses.
The ITV shares have been traded on the London Stock Exchange since February 2, 2004. Today, the company is a constituent of the FTSE 100 Index.
In 2018, the business posted annual revenue of over £3.211bn. ITV's ad sales were one of the key drivers of the company’s success, as last year’s results were mainly boosted by the World Cup. This year’s figures were predicted to be lower. However, during the first half of 2019, advertising revenue only fell by 5% compared to the expected 6%.
Some of this decline was offset by an increase in online revenue, which rose by 18% due to the company’s ongoing digital transformation.
As predicted, ITV’s adjusted operating profit fell by 13% to £327 million during the first half of this year. Some experts forecast stronger revenue and profits results by the end of 2019.
ITV stock performance overview: unprecedented volatility
Let's take a look at the ITV stock performance by checking its historical prices for the past 19 years:
The stock has witnessed many ups and downs throughout its history, characterised by multiple price fluctuations. From 2004 to mid-2007, its performance was rather stable, setting at the average price of 110.00 GBX. However, in August 2007, ITV shares started losing in value, reaching its all-time low of 19.00 GBX in February 2009.
In April 2009, the stock gained an upside momentum. Over the next six years, with the exception of occasional, short-lived negative fluctuations, the ITV shares had been mainly in the uptrend. By July 2015, the stock traded at its all-time high of 280.70 GBX.
However, in December 2015, the reverse in trend has taken place once again. Ever since then, the value of the shares has been mainly in the downtrend. At the time of writing, on September 13, 2019, the ITV shares traded at 126.30 GBX.
Presently, with a market capitalisation of almost £5.1 billion and share price of 126.30 GBX, ITV stock trades at 9.8 times forecast earnings, with a prospective 6.4% dividend yield. It has a strong balance sheet, with net debt of £1.1 billion and gearing of 1.3 times EBITDA.
ITV share price prediction: what do the forecasts look like?
The current political and economic uncertainty in the UK, including Brexit worries, continues to hamper many British companies. It saw ITV plc report a 7% drop in external revenue in the first half of 2019. However, the company continues to pursue its ultimate goal of creating a stronger, more diversified business in order to benefit from evolving viewing and advertising opportunities.
So, what are the ITV shares – buy or sell? As of September 6, 2019, the consensus forecast amongst 20 polled investment analysts suggested investors hold their position in the company, believing that ITV plc is expected to outperform the market in the near future.
According to the Financial Times, the 17 analysts have offered their own 12-month price targets for ITV plc. The predictions have a median target of 125.00 GBX, representing a -1.03% decrease from the last price of 126.30 GBX. The highest estimate is 180.00 GBX, while the lowest estimate is 96.00 GBX.
Hargreaves Lansdown, a UK-based financial service company, has provided the latest broker views of the ITV share price prediction:
Analysts at Wallet Investor have taken a less optimistic stance, referring to the company's stock as a potentially “bad, high-risk 1-year investment option”. Considering their forecast, your current investment into ITV plc may lose value in the foreseeable future.
Based on their ITV share price prediction 2019 – 2020, the business is anticipated to trade in the downtrend:
The ITV shares forecast is expected to continue to be affected by a number of political and economic developments in the UK in the coming months and years. If you think you are not ready to make long-term investment commitments, but still want to try to profit from the price volatility, you can do so through the contracts for difference (CFD) method.
You can learn more about CFD trading with free online courses and stay on top of the latest ITV shares news with Capital.com.
So, what are your bets on the ITV share price forecast? Will ITV shares go up or fall?