ITV Share Price Forecast December 2021 – Time to Buy ITV?
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Shares of British free-to-air television network ITV (LSE: ITV) are in the red today, currently trading at 111.6p at the time of writing. The share price of ITV has been in decline since mid-November, with ITV closing at multi-week lows on Friday as investors feared a sudden drop in advertising spending and a halt in programme production due to the pandemic.
ITV – Technical Analysis
According to the financial statement released by ITV, the market cap of the company is at £452.786 billion with total assets worth £408.6 billion. Revenue for 2020 was at £278.10 billion with a profit margin of 10.25% compared to £330.80 billion in 2019.
Oscillators for ITV such as Relative Strength Index (14)(44.60), Stochastic %K (14, 3, 3)(18.28), Commodity Channel Index (20)(−77.02) and Average Directional Index (14)(27.17) are neutral. Moving averages such as Exponential Moving Average (10)(113.95), Simple Moving Average (10)(114.62), Exponential Moving Average (20)(114.53), Simple Moving Average (20)(117.49) and Exponential Moving Average (30)(113.90) are pointing towards a sell action.
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Recent Developments
ITV is currently the UK’s second-largest TV broadcasting company, which generates most of its income from selling advertising spots for its online platform or during live TV commercial breaks. While viewing numbers have risen thanks to the pandemic, it also had the negative effect of putting many projects on hold.
Revenue started to suffer as no fresh content was being produced. However, the company’s third-quarter trading update revealed positive metrics in revenue from both its advertising and studio production divisions. Total sales also increased by 28% to reach £2.38 billion, which was higher than 2019 levels by 8%.
The company’s recently launched Planet V Platform was behind this elevated income. Planet V allows advertisers to maximise the efficiency of their video-based campaigns by using a suite of tools and analytics. It has recorded over 90% of advert placements from 850 different customers over the last nine months.
Management expects the total advertising revenue for this year to be the highest in the company’s history. This fact together with a 39% increase in online viewing will have a positive impact on the share price.
Should You Buy ITV Shares?
Investors interested in ITV shares should look at some of the risks. While online viewing has increased, total viewing hours have gone down by 4% since pre-pandemic levels and 8% compared to 2018. But it does have some positive metrics going for it such as a price-to-earnings (P/E) ratio of 7.3 and an earnings growth of 38%. The company has proven its ability to pivot itself to stay relevant. It has recently commenced the 2nd phase of its digital transformation which has driven the 39%increase in online viewing and increase in revenue by 54%. This is proof that ITV’s transformation is working as streaming and on-demand TV are becoming more in demand.
The various concerns that investors have with ITV are already calculated in its share price. As of today, at 111p, the ITV shares have a forward price-to-earnings (P/E) ratio of 7 times for 2022. Its dividend yield of 5.3% is ahead of the FTSE 100 average of 3.5%. Investors should be excited about the forward momentum of its ITV Hub video-on-demand (VoD) platform.
Investors can look to invest in ITV as it is investing massively in TV Studios through organic investment and via acquisition activity. This is the same studio that has brought us hits such as Love Island and I’m a Celebrity is positioned to drive future revenues. Eventhough it faces competition from US streaming giants, you can buy ITV shares simply based on its long-term prospects.
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