Liberum sees increased odds of takeover bid for ITV as pound weakens

27th Jun 2016 16:39

(ShareCast News) - Nothing had changed with respect to ITV's fundamentals following Brexit despite the approximately 20% share price drop on 24 July, analysts at Liberum said, as they stood by their 'buy' recommendation and 375p target on the stock and singled it out as a 'top-pick'.That was true even assuming a decline in advertising revenues of post-Lehman proportions, analysts Ian Whittaker, Ciaran Donnelly ad Annick Maas said in a research note sent to clients and dated 27 June.The shares were offering a "very attractive" dividend yield to boot, the analysts said.Furthermore, the 10.5% drop in the value of sterling against the US dollar - combined with the fall in the price of the company's stock - meant increased chances a bid from one of the major US media companies might soon surface.Indeed, not only did the largest and established US media outfits have both a historical and present interest in the British market , but so did the new media and tech companies.It was Liberum's belief that several of the US Internet giants had explored a bid for the English Premier League rights in the last bidding round.Even assuming a catastrophic situation - with an estimated 8.7% decline in TV advertising for 2017, compared to an 8.3% decrease after the Lehman debacle - ITV shares still looked cheap, Liberum said, offering a fiscal year 2017 price-to-earnings multiple of 10.5 and a total dividend yield, based on the 2015 payout, of about 9.0%, they said.