UBS downgrades ITV after strong run

26th Mar 2014 09:10

After an impressive outperformance in the last four years, UBS has called time on shares of ITV, downgrading the stock from 'buy' to 'neutral'.The bank has cut its target price for the stock from 230p to 210p."ITV shares have increased by 272% since the start of 2010, outperforming the FTSE 100 by 250%," explained analysts Tamsin Garrity and Jerome Sterckx."We have been positive on ITV through this time, however now feel that the market is pricing in much of the advertising recovery, Studios turnaround, balance sheet restructuring and some benefit from expansion in pay-tv, therefore we view continued outperformance is less likely," they said.Garrity and Sterckx estimate that ITV advertising will grow by 7% in 2014 for its core channel and by 6.2% for ITV Family, however they said that this recovery is already "well recognised" in the share price.They said that the market "now gives the company credit for the breadth of its turnaround, making outperformance tougher from here".Nevertheless, the analysts speculated that risk remains to the upside ahead of the 2014 World Cup which falls in the company's second quarter. They said that if the England football performs particularly strongly during he tournament, it could lead to higher advertising revenues for ITV than current forecasts predict.The stock was trading broadly flat at 195p on Wednesday morning.BC