Shares in ITV are among the biggest movers in London, up 9.4% at 202p, as investors cheered strong interim results and fast management action to deal with the implications of the UK’s vote to leave the EU.
ITV is looking to deliver £25 million of cost cuts in response to what chief executive Adam Crozier described as the 'economic uncertainty' created by the vote.
And Harris, whose EdenTree UK Equity Growth fund owns shares in the broadcaster, says ITV’s dominant market position, as well as the potential for further revenue gains, puts it in a strong position for the year ahead.
POTENTIAL BID TARGET
It could even attract an acquisition approach from telco suitor Liberty Global (LBTY:NYSE), which owns around 10% of the business, or Vodafone (VOD), Harris adds.
‘ITV's results this morning validate our long-term thesis on the company,’ said Harris.
‘A classic 'growth compounder', ITV is still the dominant free-to-air channel in the UK – with its growing production unit expanding globally.
‘High margins, cash flows and returns on capital highlight the quality of the underlying business.
‘Shorter-term worries of a slowdown in the UK and longer-term structural issues appear misplaced as ITV begins to increase viewership.
SOLID BALANCE SHEET
‘Furthermore, the recent special dividend left the balance sheet virtually unlevered and it is capable of more special dividends or acquisitions.
‘The potential upside on retransmission revenue from satellite operators has not been factored in into the current ITV share price level, nor has the possibility of operators such as Liberty Global or BT casting an acquisitive eye on ITV.'