ITV downgraded by Macquarie on consumer sector weakness
Television firm ITV was downgraded to ‘underperform’ from ‘neutral’ by analysts at Macquarie on Wednesday on the back of weakness in ad spending in the consumer sector.
ITV’s target price was almost halved to 110p from 200p by Macquarie.
The analysts said that a major drop in advertising spend during the first half of the year combined with uncertainty surrounding Brexit forced the downgrade.
"Investments in ITV Studios may finally start bearing fruits in 2018, increasing ITV’s appeal as a take-over target. But the sharp drop in consumer sector’s ad spend in H1 suggests structural factors are adding to Brexit uncertainty," a note said.
The consumer sector’s ad spend declined by 11% in the first half of 2017, higher than any European competitors.
The downgrade of ITV comes as part of a larger bearish outlook for broadcasters from Macquarie.
Analysts commented that consumer habits were moving away from mass advertising towards more direct engagement with viewers.
"Increasing demand for local and craft products diminishes the importance of TV’s most unique advantage, mass advertising," Macquarie said.
"Online purchases (ecommerce already accounts for 3% of GDP) also force advertisers to shift marketing closer to the point of sale."
Shares in ITV were trading 2% lower on Wednesday at 158.15p as of 15:15 BST.