ITV Analysts See Further Stock Upside

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Shares of the U.K. TV networks firm, which airs such hit shows as "Downton Abbey," have traded near all-time highs.

LONDON – Analysts continue to see further upside in the stock of U.K. TV networks giant ITV, which airs such hit shows as Downton Abbey and The X Factor, even though it has recently hit all-time highs.

The stock has had a strong run-up over the past two years as the company has grown its TV production arm and outperformed the U.K. advertising market. After ITV's full-year 2013 earnings report late last week, analysts have reviewed their stock models, with many predicting more upside.

On Monday, ITV's stock closed at $3.27 (£1.96). Its all-time high stands at $3.52 (£2.11).

UBS analyst Polo Tang on Tuesday said that ITV is part of his firm's list of "most preferred" stocks, maintaining his "buy" rating. He cited "upside to consensus forecasts driven by broad-based ad recovery, the World Cup, studio's strength, pay revenues, retrans fees and potential M&A."

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While ITV's stock is up 11 percent in the last three months and 70 percent over the past year, it is "inexpensive versus peers," Tang argued: "Investors are looking for reasons to continue to own it as is now close to all-time highs. The main things to point to are the imminent World Cup, which should be beneficial for advertising, overall recovery and also the structural strength coming from studios, pay TV and online."

Tang has a price target of $3.84 (£2.30) on ITV's stock.

Meanwhile, Liberum Capital analyst Ian Whittaker said that ITV's 2013 financials exceeded analysts' expectations, but he had looked for even more upside.

Still, he said he remains bullish on the stock. "It remains our top pick, and the fundamental catalysts are still there," he said, reiterating his "buy" rating and price target of $4.25 (£2.55).

Jefferies analyst David Reynolds also lauded the company's continued strength in a report entitled "More Exciting Than the Downton Abbey Finale."

"At the end of the day, what's not to like," he wrote. "ITV remains a favorite, well positioned versus the U.K. economic cycle." He predicted that his peers would raise financial expectations for 2014 and reiterated his "buy" rating on the stock with a $3.85 (£2.31) target price.

However, analyst Claudio Aspesi of Sanford C. Bernstein is less bullish, predicting that ITV's stock will be treading water over the near term.

He said in a report late last week that "ITV continues to have scarcity value among European free-to-air broadcasters," highlighting that "management's handling of [its business] transition is superb, [and] the U.K. is a benign market backdrop."

But he reiterated his "market perform" rating, the equivalent of other analysts' "neutral" rating, rather than an "outperform" rating. Argued Aspesi: "We do not believe [advertising] surprises will justify an outperform rating."

Twitter: @georgszalai