Picture supply: Getty Pictures
The ITV (LSE: ITV) share worth spiked upwards on 25 November, as discuss circulated of a potential takeover bid.
The rumours put personal fairness agency CVC Capital Companions as a high potential bidder. A serious European broadcaster, considered France’s Groupe TF1 can be on the checklist of suspects. As are All3Media, owned by RedBird Capital, and KKR-backed Mediawan.
Is there anybody not lining up a buyout?
Undervalued shares
Not one of the potential approaches appears to have gone far as but. But when competing presents come out within the new few months they may drive the share worth up.
The impact of the rumours does should be taken in context, thoughts. The value rise solely places ITV shares again the place they have been earlier than a 7 November Q3 replace.
We noticed a 20% drop in ITV Studios’ income, hit by the US writers and actors strike. The board nonetheless says the corporate is on observe to attain document FY income. Digital promoting income rose 15%.
What does the Metropolis suppose?
Forecasts gained’t imply something if ITV is purchased out. However as they stand, they paint an optimistic image. Analysts are usually bullish concerning the inventory, with a reasonably wholesome ‘purchase’ ranking on it.
Earnings are forecast to remain about the identical as much as 2026, with the dividend rising solely modestly between 2023 and 2026.
However even based mostly on that pretty static outlook, we’d see ITV shares on price-to-earnings (P/E) multiples of between 8.5 and 10 within the subsequent few years. The anticipated dividends counsel yields of 6.8% to 7% on the present share worth.
These potential bidders aren’t the one ones who see the inventory pretty much as good worth. ITV has itself been on a share buyback spree for a lot of the 12 months.
The following 12 months
Analysts have a median share worth goal of 88p for the following 12 months, up 20% from in the present day. And essentially the most bullish sees a possible achieve of 55%.
I’m solely interested by ITV for its long-term worth. However with a lot consideration on the corporate now, the following few months may show essential. And that would rely on the place the board’s 2025 outlook goes on the finish of the present 12 months.
We have now to attend till 6 March for FY outcomes, however Q3 gave us a couple of clues.
ITV outlook
Up to now the board expects “ITV Studios to ship document adjusted EBITA, at a margin inside our 13 to fifteen% goal vary“. That’s even with a mid-single-digit income decline as a result of strikes, which ought to nonetheless imply “whole natural income development of 5% on common each year from 2021 to 2026“.
Over on the Media & Leisure arm, the crystal ball exhibits whole promoting income up 2.5%, with ITV “on observe to ship a minimum of £750 million of digital revenues in 2026“.
Ought to traders take into account shopping for ITV now? If I do, I’ll base it on long-term worth and never on hopes of a short-term takeover revenue.
