Shares in ITV shed 4.4 percent, the biggest FTSE 100 faller, with the index up 0.9 percent, as Liberum Capital issues a cautious note on the commercial broadcaster, saying conversations with media buyers suggest July and August may be difficult months.
“The indications we are hearing suggest the July and August TV advertising markets may be weaker than expected with reports some advertisers have cancelled planned campaigns,” Liberum says, retaining its “buy” stance on ITV shares but flagging up expected short-term volatility in the stock.
The broker says the overall TV advertising market could be down more than 10 percent in July, with ITV slightly ahead of this, while for August, there is a smaller decline, with the market down around 5 percent and ITV off 3-4 percent, and it sees a smaller still decline in September.
Liberum says this would imply ITV advertising falling by around 4 percent in the third quarter versus earlier indications of more than 4 percent growth.
The broker says is is not changing its stance or estimates for ITV, as it likes the stock because of its longer-term fundamentals, the restructuring story and the possibility of cash returns that its net cash position allows.
“However, if the Q3 estimates are correct, it may cause downward pressure on the stock in the short term so investors should be aware of this,” Liberum says.
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