ITV's target price under review after full year results, Investec says

2nd Mar 2016 10:02

(ShareCast News) - Investec placed its target price on ITV under review and kept its rating at 'hold' on Wednesday after the broadcaster warned revenue would be flat in the first quarter.ITV reported 2015 profit rose to £641m from £605m as revenue increased 15% to £2.97bn and adjusted earnings before interest, depreciation and amortisation grew 18% to £865m.Adjusted earnings per share were up 20% to 16.5p.The company saw 6% growth in net advertising revenue (NAR) to £1.72bn, with total ITV revenue for ITV Studios up 33% to £1.24bn. Meanwhile, online, pay and interactive was up 23% to £188m.In addition, ITV said it will be returning £400m to shareholders via a 10p per share special dividend as well as the 4.1p final dividend, which it said reflect the group's strong cash generation and the board's confidence in the business.However, shares declined as the company said advertising revenue in the first quarter of the year was likely to be flat. Though the second quarter is expected to pick up thanks to the European football championships."The outlook for 1Q is worse than we expected (and we had already cut) so bad for the bulls, but the special dividend of 10p/share (£400m) is positive - while not in our numbers, this was widely anticipated however," said Investec analyst Steve Liechti."We remain at Hold - persistent take-over speculation in the media and retransmission fees imply some support though we see mid-term TV structural challenges and ITV specific issues e.g. slowing NAR, consistent share of commerical impacts pressure, peak commissioning performance and management changes."