Analyst Upgrades ITV Stock, Cites 'Compelling Value'

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LONDON — U.K. TV powerhouse ITV continues to get analyst love.

UBS analyst Tamsin Garrity on Friday upgraded the rating on the company's stock from "neutral" to "buy," citing its "compelling value" after a recent pullback.‎

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‎She also said U.K. pay TV giant ‎BSkyB, in which Rupert Murdoch's 21st Century Fox owns a 39 percent stake, could sell its 7.5 percent in the networks giant.‎

"‎We argue that there is potential for BSkyB to sell this stake as part of the plan to create Sky Europe," Garrity wrote in a report. "It is possible that BSkyB may also transfer the shares to Fox as part of the transaction to acquire its stakes in Sky Deutschland and Sky Italia, which would be taken positively by the market in our view as it could be seen as a strategic holding."

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The UBS analyst also cited retransmission consent fees, which ITV has started to push for from pay TV operators, as a catalyst for the stock.

The soccer World Cup has also been seen as a positive for ITV, which splits coverage with the BBC.‎

"Our forecast implies ITV family ad growth in the second quarter of 14 percent, versus guidance of 12 percent to 13 percent, driven by the World Cup," Garrity said Friday. "However, England's early exit is likely to mean it is hard for ITV to exceed this."

Liberum Capital analyst Ian Whittaker earlier in the week once again touted World Cup ad trends as a positive for ITV.

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"The feedback from one major media buyer suggesting ITV advertising has not been significantly impacted by England's exit from the World Cup should … be a boost to ITV," he wrote in reiterating his "buy" rating on the stock.

"‎Viewing figures for the England matches were disappointing [down 16 percent on the equivalent games in the 2010 World Cup], but thanks to the high quality of the non-England games, viewing figures for the competition as a whole have been 7 percent higher than in 2010," Whittaker added. "It currently looks like this will be a strong World Cup for ITV."

Email: Georg.Szalai@THR.com
Twitter: @georgszalai

 

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