What next for the ITV share price, after H1 results sent it down?

The ITV share price is well ahead in 2024, despite a stumble over H1 results. And I think the recovery from its five-year slump is still on.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young Caucasian woman with pink her studying from her laptop screen

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The ITV (LSE: ITV) share price took a hit on 25 July, when the TV giant posted a 2% drop in H1 revenue.

From market close on the day before the results to the price at the time of writing, the share price lost 5%.

I guess that’s not too bad, and we’re still looking at a 26% gain so for in 2024. Oh, but a 29% fall over the past five years.

Should you invest £1,000 in Rolls-Royce right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce made the list?

See the 6 stocks

Created with Highcharts 11.4.3ITV PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Profits up

Though revenue fell modestly, adjusted earnings before interest, tax, and amortisation (EBITA) rose 40%, and adjusted earnings per share (EPS) gained 43% to 3.3p.

CEO Carolyn McCall said: “Our digital advertising business continues to go from strength-to-strength and we saw a 17% increase in digital advertising revenue in the period, which contributed to the 10% increase in total advertising revenue.

Weakening advertising revenue has been behind much of the concern over ITV’s profitability in the past few years. So anything like a “strength-to-strength” change has got to be good.

But the key weakness seems to have shifted, with ITV Studios H1 revenue down 13%. The firm blamed the 2023 US writers’ and actors’ strikes for delaying revenue of around £80m in 2024 and 2025.

And that’s got to be behind the disappointing market reaction.

What now?

All in all, this set of results has to be considered mixed. And the long-term success of ITV will depened a lot on the progress of its content production. But right now, it looks like the setback from 2023 will send ripples through at least the next two years.

Still, there’s a consensus price target out there of 96p for the ITV share price. And that’s 19% ahead of the price I see now. Is that realistic?

Well, previous guidance had revenue flat in 2024. But the board revised that downward, to a low single-digit decline.

Rising earnings

Forecasts will presumably edge down a bit now. And I expect the forward price-to-earnings (P/E) ratio of 12 will increase a bit.

Looking at expectations for 2024 alone, I’d say ITV shares are probably priced about right at the moment. And that takes into account a forecast 6.2% dividend yield, pushed up by the share price fall.

It’s too soon to tell if we’ll need to lower our hopes on that front. But at least the company kept the interim payout steady at 1.7p per share.

Looking ahead to the next few years, though, I’m remaining bullish for the stock. I had hoped this H1 update might give the price the kick it needed, but clearly that didn’t happen.

Risky optimism

The second half, and possibly well into 2025, looks like it will be clouded with uncertainty. And that could keep the shares weak for a while yet.

But I’m still upbeat about the long-term outlook for ITV, and for FTSE 250 stocks in general. It’s a buy candidate for my next Stocks and Shares ISA purchase, for sure.

Should you invest £1,000 in Rolls-Royce right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rolls-Royce made the list?

See the 6 stocks

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Up 30% in weeks, does the BAE Systems share price still offer value?

The BAE Systems share price has been on a tear over the past couple of months. This writer sees limited…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Hunting for shares to buy as the market trembles? Remember this!

After a choppy week in global stock markets, our writer goes back to basics in his hunt for bargain shares…

Read more »

Investing Articles

3 simple principles to help build wealth in an ISA

As a new tax year opens up new ISA allowances for many investors, our writer shares a trio of things…

Read more »

Investing Articles

US trade tariffs: what they could mean for UK shares like Ashtead, Compass Group, and Experian

US trade tariffs continue to rock global markets, and the UK is no exception. Our writer considers how a new…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Dividend Shares

The Trump slump has smashed these FTSE 100 shares!

After a rough week for US and UK shares, investors have been shaken. But now these FTSE 100 stocks have…

Read more »

Investing Articles

£10,000 invested in Rolls-Royce shares 5 years ago is now worth…

Rolls-Royce shares have been on fire since April 2020. Part of this is the result of pandemic restrictions lifting, but…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

£10,000 invested in Tesla stock at its peak in 2024 is now worth…

Over the last few months, Tesla stock has lost nearly half its value. Here, Edward Sheldon explores a few takeaways…

Read more »

Investing Articles

Is the S&P 500 heading for an epic stock market crash?

Our writer shares his thoughts on a very crazy time for the S&P 500 and the wider stock market. How…

Read more »