Broker snap: ITV still a 'buy' but outlook disappoints, says Nomura

15th May 2013 09:48

ITV's first-quarter results were slightly ahead of forecasts, according to Nomura, however the broker said that Wednesday's negative market reaction was due to its cautious outlook for the remainder of the year.First-quarter revenues were up 1.0% to £571m at the UK broadcasting group, marginally above Nomura's £566m estimate, helped by a better-than-expected 6.0% rise in ITV Family net advertising revenue (NAR).Revenues from ITV Studios were down, as expected, though the 15% decline was a little better than forecasts.Meanwhile, Nomura said that the company recorded an "impressive" audience share performance with ITV Family share of viewing up 2.0% to 23.4% in 2013 so far.However, a worse-than-expected outlook sparked a 3.02% fall in the shares to 127.73p (by 10:10 on Wednesday) after the company said that first-half ITV Family NAT would be down 3.0%, compared with the Nomura's own -1.5% forecast.The broker said that the ad outlook is "clearly disappointing" and may put consensus ad estimates under pressure. Nevertheless, on a positive note, ITV said that Studios is expected to deliver double-digit revenue growth in 2013 and consensus forecasts for this division are expected to be revised higher, the broker said."Overall, the transformational plan seems on track with strong studios guidance, cost savings on track and even an increase in viewing. However, the weaker-than-expected Q2 ad outlook will likely dominate sentiment today," Nomura said.Nevertheless, the broker kept its 'buy' rating and 130p target price for the stock.BC