The ITV (LSE: ITV) share price spiked upwards on 25 November, as discuss circulated of a doable takeover bid.

The rumours put personal fairness agency CVC Capital Companions as a prime potential bidder. A significant European broadcaster, considered France’s Groupe TF1 can be on the record of suspects. As are All3Media, owned by RedBird Capital, and KKR-backed Mediawan.

Is there anybody not lining up a buyout?

Undervalued shares

Not one of the doable approaches appears to have gone far as but. But when competing affords come out within the new few months they may drive the share price up.

The impact of the rumours does must be taken in context, thoughts. The price rise solely places ITV shares again the place they had been earlier than a 7 November Q3 replace.

We noticed a 20% drop in ITV Studios’ income, hit by the US writers and actors strike. The board nonetheless says the corporate is on observe to realize file FY earnings. Digital promoting income rose 15%.

What does the Metropolis assume?

Forecasts gained’t imply something if ITV is purchased out. However as they stand, they paint an optimistic image. Analysts are typically bullish concerning the inventory, with a reasonably wholesome ‘buy’ score on it.

Earnings are forecast to remain about the identical up to 2026, with the dividend rising solely modestly between 2023 and 2026.

However even primarily based on that pretty static outlook, we’d see ITV shares on price-to-earnings (P/E) multiples of between 8.5 and 10 within the subsequent few years. The anticipated dividends counsel yields of 6.8% to 7% on the present share price.

These potential bidders should not the one ones who see the inventory nearly as good worth. ITV has itself been on a share buyback spree for a lot of the yr.

The subsequent 12 months

Analysts have a mean share price goal of 88p for the following 12 months, up 20% from at this time. And essentially the most bullish sees a possible achieve of 55%.

I’m solely serious about ITV for its long-term worth. However with a lot consideration on the corporate now, the following few months may show essential. And that might depend upon the place the board’s 2025 outlook goes on the finish of the present yr.

We’ve to attend till 6 March for FY outcomes, however Q3 gave us a number of clues.

ITV outlook

To this point the board expects “ITV Studios to ship file adjusted EBITA, at a margin inside our 13 to fifteen% goal vary“. That’s even with a mid-single-digit income decline because of the strikes, which ought to nonetheless imply “whole natural income progress of 5% on common each year from 2021 to 2026“.

Over on the Media & Leisure arm, the crystal ball reveals whole promoting income up 2.5%, with ITV “on observe to ship not less than £750 million of digital revenues in 2026“.

Ought to buyers contemplate shopping for ITV now? If I do, I’ll base it on long-term worth and never on hopes of a short-term takeover revenue.