UBS downgrades ITV to 'sell' on weak ad outlook, digital growth risks

Investing.com -- UBS has downgraded ITV (LON:ITV) to “sell” from “neutral,” warning that the UK broadcaster faces mounting pressure from falling ad revenues and intensifying competition in the digital streaming space, in a note dated Wednesday. 

The investment bank also cut its price target to £0.63 from £0.73, reflecting revised earnings forecasts and lower margin expectations.

UBS now expects ITV’s total advertising revenue (TAR) to fall by 4.8% in 2025, wider than the current consensus estimate of a 1.6% drop. 

Analysts are forecasting a 2% decline in Q1, followed by a steeper 11% fall in Q2. The weak second quarter is attributed to tough comparables against last year’s UEFA Euro 2024 tournament, which boosted viewing and advertising spend when England reached the final.

UBS notes that to meet consensus for the full year, ITV would need to grow TAR by 9.3% in Q4—a scenario the analysts view as unrealistic, especially with new UK rules banning junk food ads to children coming into effect in October.

In addition to ad market headwinds, UBS raised concerns about ITV’s digital business. The broadcaster’s streaming platform, ITVX, is facing increased competition from ad-supported services like Amazon (NASDAQ:AMZN) Prime Video. 

Citing data from audience measurement firm Barb, UBS estimates Amazon Prime’s UK streaming hours were 21% higher than ITVX in 2024. In March 2025 alone, Amazon Prime had six shows in the UK’s top 50—up from none the year before.

ITV has pinned its growth strategy on digital, but UBS believes its current trajectory won’t be enough to offset the ongoing decline in traditional broadcast. 

Digital advertising accounted for just 26% of ITV’s ad revenue in 2024, and UBS does not expect it to exceed 50% until the end of the decade.

UBS also questioned the potential for ITV to unlock value through a sale of its Studios arm. While recent media reports have suggested merger interest, analysts argue that vertical integration is still critical for European broadcasters and that any sale is unlikely to result in material shareholder returns.

Following ITV’s 2024 results, UBS cut its group net revenue forecast by 4% and adjusted EBITA by 11% for FY25. 

It also revised its 2025 earnings per share estimate down 9% to 7.5p, citing higher finance costs, weaker ad revenue, and a slower profit-to-cash conversion.