13th Mar 2023 18:38
(Alliance News) - Researchers at Shore Capital downgraded their ITV PLC forecasts on a challenging advertising environment, but retained a "Buy" rating.
While Shore Capital now estimates a higher revenue than before for 2023 and 2024, they expect lower dividends per share and earnings before interest, tax, depreciation and amortisation for both years, compared to previous expectations.
For 2023, they upgraded their total external revenue revenue forecasts by 1.0% to GBP3.71 billion from GBP3.67 billion, but still below 2022's revenue of GBP3.73 billion. Ebitda is now expected at GBP594 million compared to GBP654 million, and down from GBP707.0 million in 2022. Adjusted earnings per share are now anticipated at 9.4p, compared to 10.4p previously and down from 12.4p in 2022. The dividend is set to be 5.1p per share, down from 5.2p previously and flat from 2021.
For 2024, the total external revenue forecast was upwardly adjusted to GBP3.86 billion from GBP3.81 billion, while Ebitda was downgraded by 11% to GBP635 million from GBP716 million. Adjusted earnings per share are estimated at 10.3p, down 9.8% from previous estimates of 11.4p, and earnings per share are expected 3.6% lower, at 5.3p compared to 5.5p.
Shore Capital expects adjusted pretax profit to fall from 2023 to below 2022 levels. It is estimated at GBP507.5 million in 2023, down 25% from GBP672.0 million in 2022, but to then recover to GBP554.3 million in 2024 and to GBP641.9 million in 2025.
For 2022, the company had reported an 8.0% growth in external revenue to GBP3.73 billion from GBP3.45 billion in 2021. Total revenue was up 7.5% to GBP4.35 billion from GBP4.04 billion. Meanwhile, adjusted pretax profit fell 13% to GBP672 million from GBP774 million.
"The company envisages a challenging short-term advertising outlook, a view subsequently echoed by STV with a year on year first quarter total advertising revenue of 11% and a 10% to 15% decline in April expected," said Shore Research Analyst Roddy Davidson.
He added: "There was also a degree of caution around sort-term margins at ITV Studios (production/general cost inflation) although a guidance range of 13% to 15% was maintained alongside an annual revenue growth target of 5% per year. More broadly, substantial cost savings continue to accrue across the group as planned."
Shore Capital retained its "Buy" rating for ITV.
ITV shares shares closed 3.5% lower at 82.20 pence each in London on Monday.
By Tom Budszus, Alliance News reporter
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