National Grid rises on upgrade but ITV slides as analysts cut target

Discussion in 'Market News' started by Lily, May 13, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
    Likes Received:
    Broadcasting group continues to decline after disappointing update

    National Grid has edged higher in a falling market after a broker upgraded its share price target.

    Analyst Andrew Fisher at Berenberg Bank has lifted his target from 850p to 970p but kept his hold rating on the basis that the price looks up with events. National Grid is up 0.5p at £10.03. He said:

    If ever there has been a stock to tuck away in the portfolio and hold for the long term, National Grid is it. The group’s long-and short- term share price performance has been outstanding: up 278% since flotation in 1995 (up 122% versus the FTSE 100 and up 83% versus the SX6P [European utilities index]; a 13% per annum average total shareholder return); up 12% in the last 12 months (up 26% versus the FTSE 100 and up 17% versus the SX6p).

    We are continuously kicking ourselves for not embracing the seemingly limited valuation upside in the shares in light of the group’s dependable earnings stream and an attractive dividend policy (dividend per share growth is at least in line with RPI for the foreseeable future).

    The ad outlook from the ITV first quarter interim management statement is even worse than expected. Consensus should be cutting 2016, but also needs to start thinking further out. This is not a temporary Brexit blip. On a day when Facebook is reported to be set to overtake C4 in ad revenues in the UK, and we estimate has already overtaken ITV in online video... 3% consensus ad growth from 2017 needs to be cut too. There is reinvestment risk too as ITV needs to respond in programming and digital acquisitions. The stock is cheap versus history, but the world has changed.

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