ITV Share Price Forecast August 2021 – Time to Buy ITV?

Shares of British media company ITV (LSE: ITV) are in the red today on the back of the company’s plans to propose a final dividend for the full year. The company made the announcement after it was encouraged by the advertising outlook in June.

ITV – Technical Analysis

ITV’s financial statement reveals that the company’s market cap is £4.492 billion with total assets worth £4.086 billion. The revenue for 2020 was at £2.78 billion with a profit margin of 10.25%. Revenue for 2019 was at £3.31 billion. The debt to assets percentage is at 70.88%. At the time of writing, ITV shares are priced at £113.30 with a downtrend of -0.92%.

From ITV’s technical information, we get a bigger picture. Oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(42.60), Williams Percent Range (14)(−83.58), Bull Bear Power(−7.02) and Ultimate Oscillator (7, 14, 28)(32.9). Moving averages such as Simple Moving Average (50)(124.9), Exponential Moving Average (100)(120.69),  Simple Moving Average (100)(124.16) and Exponential Moving Average (200)(113.72) are pointing towards sell.

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Recent Developments

ITV was formed as a result of a merger between Granada and Carlton in 2004. The company has a number of free to air digital channels in addition to its terrestrial ITV1 channel. ITV recently signed an extended long-term commercial partnership with European pay-TV company Sky which is a part of Comcast Corp. The partnership will allow Sky customers to access content from ITV which builds on a previous agreement. ITV is expected to launch the ITV Hub App on the Sky Q service, sometime during 2022. The deal also includes ITV launching addressable advertising on Skyplatforms, via both linear viewing and video-on-demand.

ITV achieved its largest advertising revenue for the month of June, driven by the Euros football tournament as well as the easing of restrictions. The company is pouring further funds into its studios which is currently doing very well as it experienced increased demand for content during the pandemic. However, there are challenges such as the delivery of multi-location shoots under current Coronavirus restrictions.

ITV’s production arm has been busy working on producing new and returning programme commissions for the United Kingdom as well as for international markets. This includes titles like Line of Duty, Unforgotten and Pembrokeshire in the UK and Loveisland in the U.K., Spain, Germany and Netherlands. The company’s total external revenue increased to £1.5  billion, a 27% increase in the six months leading up to June.

Should You Buy ITV Shares?

Investors should consider the risk that companies like Netflix and other streaming services pose to ITV’s core broadcast business. There is a high possibility that this could lead to a long-term decline in its shares. There have been efforts by ITV to address this risk. For instance, the company has expanded its studio business which makes programmes for ITV and other channels including Netflix. However, this only accounted for 30% of its profits during the first half of the year.

ITV’s advertising sales on the other hand account for most of its profits. It rose to £866 million during the first half of the year, a 29% increase. There is a chance that ITV won’t be able to maintain its current level of advertising sales as viewing patterns change considerably. However, ITV shares look cheap for a business that doesn’t have much debt and decent profit margins. ITV is also a potential takeover target as it has a huge back catalogue of popular programmes under its belt. So Investors can consider buying the shares at the moment, although they must closely watch for any sign of the company’s turnaround progress slowing down.

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