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I think this FTSE 100 stock is a great recovery opportunity!

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One FTSE 100 stock I believe is a recovery opportunity is ITV (LSE:ITV). Should I buy shares for my portfolio?

Restored to the FTSE 100

ITV is a London-based media firm. Some of the brands it owns include ITV, ITV2, ITV3, ITV4, ITVBe, ITV Encore, and CITV. The content produced by ITV is also available on Internet streaming platforms via its ITV Hub platform. It also owns ITV Studios which produces and markets content for other British television channels as well as media houses in the US.

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The global pandemic slowed ITV’s attempts to bounce back from a decline in recent years. It is, however, becoming an attractive investment prospect in my eyes once more. It has been restored to FTSE 100 blue-chip glory after falling out of the top tier.

As I write, shares are trading for 114p per share. At this time last year, shares were available for 59p per share. That is an impressive 93% increase. To provide some context to its drop off, at this time five years ago, shares were trading over the 200p mark. 

Performance and impact of the pandemic

ITV released its interim half-year report last week for the period ending 30 June 2021. ITV reported that total external revenue was up 27% compared to the same period last year. Adjusted group earnings before interest, tax, and amortisation (EBITA) was up 98%. This was driven by a recovery in advertising revenue. The same period last year saw a drop off due to the pandemic and cancellation of sporting spectacles and other live TV events. Adjusted earnings per share were up 103% at 5.9p per share.

In its full-year results reported in March for the year ended 31 December 2020, there were positives too. Despite revenue being slightly down (which was expected due to the pandemic) there was a large successful cost cutting exercise. In 2020 it reduced costs by £116m which was nearly double its target of £60m.

Although the pandemic is not over, many of ITV’s delayed television and media spectacles have resumed, including the UEFA European football championships. Popular reality TV programme Love Island also resumed.

Risk and reward

Like all FTSE 100 stocks, ITV has its own risks. Two main risks stand out to me. Firstly, competition among media and television firms is rife and intense. Everyone is competing for the best content and with a plethora of options available for consumers via traditional mediums such as television channels as well as digital streaming options. This competition could affect ITV’s standing and bottom line if it doesn’t continue its momentum.

The other risk for ITV is if the pandemic intensifies once more. If new Covid-19 variants occur and restrictions are introduced once more, this could affect its content output like it did last year and affect its bottom line.

Overall, I do like ITV as a FTSE 100 stock and believe it could be a good recovery play part of my portfolio. I am considering adding some shares to my portfolio just now.

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Jabran Khan has no position in any shares mentioned. 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.

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