Credit Suisse ups EPS forecast for ITV

11th Sep 2014 12:00

Credit Suisse lifted shares in broadcaster ITV on Thursday after upping its target price by 20p and its earnings per share forecasts by 6%.The broker improved its outlook following comments by culture secretary Sajid Javid, who said he would look into whether broadcasters such as ITV could potentially begin charging satellite and cable operators to carry their transmissions.Credit Suisse said that the value of the group could soar by as much as £1.5bn if the additional charges were applied."If we were to take the per subscriber monthly fees charged by US networks as a benchmark, we calculate ITV could generate £11m of incremental free cash flow in the first year, rising to £90m over the next decade," analyst Omar Sheikh said."The net present value of this free cash flow stream is £1.5bn, or 38p per share. The impact of retransmission is not included in our forecasts or valuation of ITV at this point."He continued: "We think ITV deserves to trade at a premium valuation to European peers given (i) the relative strength of the UK advertising market; (ii) the strategic value of ITV Studios, and (iii) the potential for the introduction of retransmission fees."The broker raised its target price to 270p and reiterated its long-standing 'buy' rating.