Rating upgrade pushes ITV stock to biggest rise for three months
BROADCASTER ITV enjoyed its biggest daily rise in almost three months after Morgan Stanley upgraded its rating for the first time in over a year.
“Everything appears bad,” analyst Patrick Wellington said, urging investors to “buy”, as he pointed to falling advertising revenues and a potentially weakening UK economy.
Nevertheless, the US investment bank lifted its rating to “overweight” from “equal-weight” citing a “very attractive” valuation. Shares have plunged 36pc since the start of 2016 and the blue-chip stock is now the most lowly rated share in all of European media.
Mr Wellington added: “The business is in good shape. We think ITV was early into the advertising downturn and that its impact is largely discounted in the shares.”
The right moment to buy TV stocks is typically when advertising starts to improve, Mr Wellington explained. “June 2017 should mark the low point for ITV advertising,” he said.
As investors tuned back into the broadcaster amid hopes advertising will pick up soon, shares bounced 5.9p, or 3.3pc, to 182.8p. On the wider market, the
FTSE 100 posted its longest run of weekly losses in a year, sliding for a third successive week – down 0.53pc. On the day, it surrendered 15.16 points, or 0.2pc, to close at 7,424.13.
Energy supplier Centrica powered 2.1p higher to 208½p on a rating upgrade. JP Morgan lifted its rating to “neutral” citing “a weakened Tory government” opting for further consultation on energy-market reform rather than pressing ahead with a market-wide price cap. However, analyst Christopher Laybutt cautioned: “The spectre of
price regulation still looms, with Ofgem to explore further options to help the energy market ‘work better for all consumers’.” Elsewhere, insurer
Admiral edged 31p higher to £20.36 on a price target upgrade from Deutsche Bank. Analysts believe consensus forecasts sector-wide are “too low”. As a result, the bank reiterated its “buy” recommendations on Direct
Line and esure, pushing shares 3.6p and 3p higher, respectively.
Gold miners were also among the risers as investors sought safe-haven assets following a sharp slide in oil prices this week.
Fresnillo climbed 45p to £16.05 and Randgold
Resources inched up 35p to £71.15. Mining giant
Glencore dipped 2.4p to 279½p after it hit back with an increased offer of $2.675bn (£2.1bn) to buy Rio
Tinto’s Australian coal assets. Earlier this week, Rio said it had selected Yancoal to buy its Coal & Allied unit in Australia. Shares in Rio Tinto rose 14p to £30.53.
Elsewhere, Credit Suisse added Royal Dutch Shell to its “European focus list”. Nevertheless, shares dipped 1p to £20.97.
On the flip side, JP Morgan cut BAE Systems’ rating to “neutral” on valuation grounds, sending shares 14½p lower to 650p.
Domino’s Pizza fell 8.1p to 282.6p after Berenberg cut its rating to “hold” from “buy”. The bank sees near-term challenges weighing on the FTSE 250 stock, including food price inflation, a weak consumer environment and the danger it falls behind the technology curve.
Finally, York-based veterinary medicines group
Animalcare announced plans to buy Belgium-based Ecuphar NV, in a deal that will create an enlarged group with direct veterinary sales into seven countries across Europe. As the acquisition constitutes a reverse takeover, shares were suspended at 392½p yesterday.