ITV Share Forecast November 2021 – Time to Buy ITV?

Shares of British media company ITV(LSE: ITV) are in the green today, closing at $125.85 with an uptrend of 15.14%. The share price has had a rocky six months and is down 7% during this period. They continue to decrease after a brief recovery period and are currently down 42% over a five-year period.

ITV – Technical Analysis

According to ITV’s financial statement, the market cap of the company is at £4.376 billion with total assets worth £4.086 billion. Revenue for 2020 was £2.78 billion with a profit margin of 10.25% compared to £3.31 billion in 2019.

Oscillators for ITV such as Relative Strength Index (14)(77.18), Stochastic %K (14, 3, 3)(73.90),  Commodity Channel Index (20)(411.43), Average Directional Index (14)(23.70) and Awesome Oscillator(4.91) are neutral. On the other hand, moving averages such as Exponential Moving Average (10)(111.13), Simple Moving Average (10)(109.63), Exponential Moving Average (20)(108.84), Simple Moving Average (20)(106.98) and Exponential Moving Average (30)(108.49) are indicating a buy.

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Recent Developments

ITV was formed as a result of Granada and Carlton’s merger in 2004. Its offering includes its terrestrial ITV1 channel and free-to-air digital channels including ITV2, ITV3, ITV4 and CITV. ITV is the second-largest TV broadcasting company in the UK. Unlike a lot of modern streaming services, the company’s main sources of revenue are its online platform and selling advertising spots during live TV commercial breaks. The pandemic saw increased viewers of ITV as everyone was stuck at home during the lockdown. However, it also resulted in numerous projects being put on hold, and revenue actually suffered without any fresh content appearing on the platform.

However, ITV shares more than doubled yesterday after the company released its trading update for Q3, which indicated that much of the company’s past problems are over. ITV’s production studio and advertising divisions achieved double-digit growth compared to last year due to pandemic-related disruptions posing less of an issue. When it comes to total sales, it increased by 28% from £1.86 billion to £2.38 billion, which is 8% higher than 2019 levels.

A major part of the increased income generated can be attributed to ITV’s recently launched platform, Planet V. Planet V provides a set of tools allowing advertisers to maximize the efficiency of their video-based campaigns. It accounted for over 90% of advert placements over the last 9 months with orders from 850 different customers. ITV’s share price surged on these metrics as there was an increase of 39% in online viewing.

Should You Buy ITV Shares?

While metrics look impressive, investors still have to consider some risks and challenges that ITV has to overcome. While online viewing has increased, total viewing hours have actually decreased by 4% since 2019. This suggests that Netflix and other streaming platforms are competing with ITV for viewing time. While ITV has an online user base of 4.8 million registered accounts, it pales in comparison to Netflix’s 210 million paying subscribers. Advertisers may start to look at other platforms if the company cannot sustain its viewing time, which would be disastrous for ITV’s share price.

While investing in a video streaming business, investors should always look at the company’s audience retention power. Making predictions on consumer tastes and viewing habits isn’t exactly straightforward for investors as well. That being said, ITV has a good record of releasing popular content. With management firmly on the path to embrace and adapt its business to the new streaming era, it will mean positive things for ITV’s share price. Considering this, investors can easily pick up ITV shares at the moment.

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