Analysts lift ITV forecasts following Thinkfactory deal

Financial analysts have reacted positively to ITV’s acquisition of US producer Thinkfactory Media.

The UK commercial broadcaster bought 65% of the Hatfields & McCoys producer earlier this week and financial specialists at Westhouse Securities lifted its profit forecasts by 2% for the 2013-2015 period and upped its share price target.

“Whilst it will not make a significant financial impact, yesterday’s acquisition of another US production company represents a positive step in ITV’s strategy of building content and increasing its international footprint,” Westhouse noted. “We feel increasingly comfortable with the group’s ability to deliver growth, control costs and throw off cash.”

The finance house added that the deal marked another positive step by ITV in creating a diverse content production portfolio, in turn reducing its exposure to the cyclical TV advertising market.

It estimates that the broadcaster paid a multiple of 7-8 times EBIDTA for the LA-based producer.

It raised its share price target to 156p and lifted the 2013 pre-tax profit forecast to £514.8 million (2012: £420 million). At close of play yesterday, ITV’s shares traded at 136p.

ITV CEO Adam Crozier has predicted the UK broadcaster’s content arm, ITV Studios, will deliver “double-digit” growth this year, despite revenues of £201 million in the most recent quarter dipping 5%.

Separately, ITV Studios announced yesterday that it has inked a coproduction deal with Masterpiece/WGBH in the US for Breathless, a new 6x1hr medical drama starring Jack Davenport (Pirates of the Caribbean).