Broker Westhouse has spotted a positive read-across for free-to-air broadcaster ITV (ITV) from bullish TV advertising projections for the UK.

According to forecasts (7 Jul) from GroupM, WPP’s (WPP) media buying arm, spending on TV ads will increase 9% in 2015 to £4.2 billion. After falling amid market turmoil yesterday afternoon ITV shares are down 0.2% today at 256.6p.

GroupM says big advertisers are reacting to the recovery in the British economy by investing in television campaigns to build up their brands. This runs counter to fears that digital platforms will undermine TV’s ability to secure advertising revenues.

Retaining an ‘add’ recommendation and 294p price target Westhouse comments: ‘ITV should be the key beneficiary of this dynamic, adding to our confidence that it will record attractive net advertising revenue growth this year and potentially suggesting that our current forecast of a 5% year-on-year uplift in this measure could prove too conservative.

‘We have also been encouraged by progress in adding content production – a process which continues to reduce the group’s overall advertising exposure and to build a platform from which to pursue digital revenue opportunities.’

ITV reports its half-year results on 29 July.

Issue Date: 08 Jul 2015