Further to circumstances of the past few days things have come to a head with ITV. A few weeks back you will recall the Club voted to:
- remove the ITV -20% stop/loss
- review the situation after the EU Referendum
The first point was implemented previously but now we need to decide whether there is appetite to reinvest in ITV or not. We have sufficient funds to reinvest ~£600 (same as previously) and still have funds to choose another share to purchase or reinvest in.
This vote is to decide whether we reinvest and if so at what price threshold to buy. First some background:
- many analysts still think ITV is a strong buy, even after BREXIT (it was the no.1 recommendation to invest in, in the case of a REMAIN vote)
- the pound has weakened and the share price of ITV has plummeted to ~35% less than we paid for our own shares (it was ~42% down yesterday 27th June)
- essentially the company still has a strong pedigree and satisfactory performance over the past year and its future expansion plans look good
- the lower the share price and exchange rate the better chances of a takeover bid happening and share price increasing significantly as a result
A bit of analysis from yesterday that is of interest:
That target price is currently 209p more than the current value.(ShareCast News) - Nothing had changed with respect to ITV's fundamentals following Brexit despite the approximately 20% share price drop on 24 July, analysts at Liberum said, as they stood by their 'buy' recommendation and 375p target on the stock and singled it out as a 'top-pick'.
That was true even assuming a decline in advertising revenues of post-Lehman proportions, analysts Ian Whittaker, Ciaran Donnelly ad Annick Maas said in a research note sent to clients and dated 27 June.
The shares were offering a "very attractive" dividend yield to boot, the analysts said.
Furthermore, the 10.5% drop in the value of sterling against the US dollar - combined with the fall in the price of the company's stock - meant increased chances a bid from one of the major US media companies might soon surface.
The above said, there is risk of pouring more money into a bad thing, so reinvestment does not come without a risk. The real question is how big a risk is it? Is it worth us buying more at the right price? What is the right price? Let's find out what appetite we have for this.
As before - it is important we complete this vote as quickly as we can