Broadcaster ITV is heading for a new low after a downgrade from its joint house broker UBS. The company seems to think its shares are undervalued at this level, but the City clearly disagrees.
So far ITV's shares are 4.7p lower at 63.2p. They have been weak for a while - partly because of the overhang of BSkyB's stake, much of which will have to be sold at some point, and partly on worries about a consumer downturn.
It is the latter point which UBS highlights this morning, as it moves from neutral to sell and cuts its ITV price target from 70p to 60p.
Analyst Daniel Kerven writes: "Over the past year we have been negative on UK media owners given structural pressures and the risk of a UK housing and consumer slowdown. This risk is fast becoming a reality with the TV market declining over the first four months and with market estimates now suggesting May is down by around 5% or more. Euro 2008 without England is unlikely to reignite the market and we would expect growth to slow in the second half given tough comparisons and as advertisers respond to slowing consumer spend and margin pressures.
"We have cut our 2008 TV ad market growth forecast from +1% to -2% and from 2.5%to -1% in 2009. Our ITV1 ad growth falls from -1.9% to -4.2% and -1.6% to -5%in 2008 09, respectively. This results in a 20% downgrade to 2009 earnings to £273m."
For good measure he adds, "ITV's production and online targets are unrealistic in our view."
Among the other fallers, Tesco is 14.75p lower at 375.5p on news it is freezing expansion of its Fresh & Easy chain in the US.
A downgrade from Morgan Stanley left Vodafone 5.6p lower at 151.4p while Dairy Crest fell 30.75p to 448p as ABN Amro and Dresdner Kleinwort both reduced their ratings after last week's trading update.
But insurer Friends Provident jumped 4p to 124.1p as it rejected a 150p a share offer from US private equity group JC Flowers. And pharmaceutical group AstraZeneca added 35p to £18.83 on good trial news about its anti-cholesterol drug Crestor.
Overall though the negative is outweighing the positive and the FTSE 100 is 27.5 points lower at 5665.4.
