Broker view: ITV is a ‘buy’ on profit growth

2nd March 2016

As ITV reports its full year results Helal Miah, investment research analyst at The Share Centre and Trevor Green, head of UK equities at Aviva, explain what they mean for investors…

Helal Miah says: “ITV enjoyed another solid year of double digit profit growth, with higher revenues across all parts of the business despite audience numbers slipping. The company remains confident that it will continue to grow revenues across the business in 2016, driven by a number of initiatives and acquisitions.

“Investors should be aware that ITV has proposed a final dividend of 4.1 pence per share, making a full year dividend of 6 pence per share, which is ahead of its guidance. It is also proposing a special dividend of 10 pence per share.

“With so many options now available to consumers, ITV has had to fight hard to maximise its audience share. In a fast changing environment the changes that have been made in the group appear to have come in time to save what was once a troubled company. The debt situation has been addressed, enabling the group to make a number of acquisitions geared towards boosting its production business.

“Today’s results highlight that there is be more to come in the medium to longer term, and we therefore continue to maintain our ‘buy’ recommendation on the stock.”

Trevor Green, head of UK equities at Aviva Investors, adds: “How investors interpret the results and outlook statement today will depend on whether their time horizon is short or long term.

“If you are of a longer term persuasion, then you will have appreciated the positive message the special dividend sends.

“This, along with the strong organic growth in studio and the audience share improvement, has reassured that the strategy remains on track with Q2 and onwards forecast to see a bounce back in growth.

“If, on the other hand, you are only concerned about the here and now, then you will be focused on pedestrian-looking Q1 NAR guidance and a weak April number.”

(Aviva Investors is a top 15 shareholder in ITV).

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