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I ITV (LSE: ITV) share price surged on 25 November, as a takeover bid spread.
The rumor puts private equity firm CVC Capital Partners as the leading bidder. Europe’s biggest broadcaster, believed to be France’s Group TF1, is also on the suspect list. So are All3Media, owned by RedBird Capital, and KKR-backed Mediawan.
Does anyone not have a shopping queue?
Unlisted shares
None of the possible methods seem to have gone very far at this point. But if competing offers come out in a few new months they can increase the price.
The effect of rumors must be taken in context, in mind. The price increase brings ITV shares back to where they were before the Q3 update on 7 November.
We saw a 20% drop in revenue for ITV Studios, which was hit by US writers and actors. The board still says the company is on track to achieve record profits for the FY. Digital advertising revenue increased by 15%.
What do you think about Muzi?
Predictions will mean nothing if ITV is bought. But as they stand, they present a hopeful picture. Analysts are generally bullish on the stock, with a healthy ‘buy’ rating on it.
Earnings are predicted to remain the same through 2026, with profits rising slightly between 2023 and 2026.
But even based on that optimistic view, we’ll see ITV shares at a price-to-earnings (P/E) multiple of between 8.5 and 10 over the next few years. Expected dividends suggest a yield of 6.8% to 7% at the current share price.
Those potential bidders are not the only ones who see the stock as good value. ITV has also been in a buyback phase for most of the year.
Next 12 months
Analysts have a share price target of 88p over the next 12 months, up 20% from today. And the most bullish sees a gain of about 55%.
I only like ITV for its long term value. But with so much attention on the company now, the next few months could prove crucial. And that could depend on where the board’s vision for 2025 goes by the end of the current year.
We have to wait until March 6 for FY results, but Q3 has given us a few clues.
ITV Viewing
So far the board expects “ITV Studios will deliver a record adjusted EBITA, with margins within our target range of 13 to 15%.“. That’s even with a mid-single-digit drop in income due to the strikes, which should still mean “total organic income growth of 5% on average per year from 2021 to 2026“.
Across the Media & Entertainment arm, the crystal ball shows total advertising revenue up 2.5%, with ITV “It is on track to deliver at least £750 million in digital revenue by 2026“.
Should investors consider buying ITV now? If I do, I will base it on long-term profit and not on the hope of a short-term takeover profit.
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