ITV surges on renewed takeover speculation

ITV hit a four-month high on Friday as analysts reheated takeover hopes.

Goldman Sachs added ITV to its ‘conviction list’ of recommended stocks as part of a media sector review. “ITV is one of the most likely M&A candidates in our coverage, given its content ownership (circa 35 per cent of 2017 revenues), lack of ownership restrictions and sterling weakness,” Goldman told clients.

JPMorgan Cazenove, ITV’s joint house broker, also flagged up the weak pound as benefiting potential predators, such as 10 per cent shareholder Liberty Global.

ITV trades at just 12.5 times 2017 earnings, a 17 per cent discount to the European free-to-air broadcasters, so concerns around Brexit are already in the price, JPMorgan argued. It put a 235p target on the stock, which climbed 2.8 per cent to 208.6p.

The wider market’s record-breaking run continued into a 14th day, its longest ever winning streak. The FTSE 100 ended 0.6 per cent higher, up 45.44 points, to a new record high of 7,377.81.

Housebuilders climbed amid rumours that the government’s white paper on housing policy expected this month may be further delayed because of a pushback against the more radical proposals from the Department for Communities and Local Government. Barratt Developments rose 3.6 per cent to 516p and Taylor Wimpey added 0.9 per cent to 172.6p.

SIG jumped 16.1 per cent to 108.9p and Grafton rose 8.4 per cent to 586p on upbeat trading statements from the building materials suppliers.

Dunelm, the soft furnishings retailer, fell 5.9 per cent to 698p on a downgrade to “underperform” from Jefferies. Management’s self-help strategy is sensible but because homewares are discretionary purchases, it may not be enough when inflation is coming, real disposable incomes are reducing and housing transactions are under pressure, Jefferies said.

Mondi hit a record high, up 1.5 per cent to £17.68, after Merrill Lynch added the paper maker to its “buy” list. It cited Mondi’s exposure to packaging, where prices are rising, and the optionality provided by its strong balance sheet.

Shire recovered from Thursday’s Trump-triggered sell-off, adding 2.3 per cent to £46.62. US prescription data showed Shire’s dry-eye treatments continuing to take share within a growing market.

Pennon fell 4 per cent to 776.5p after Credit Suisse raised concerns about the group’s energy-from-waste projects. Cutting Pennon to “underperform”, Credit Suisse halved the current value of a Manchester joint venture to reflect the risk of a contract renegotiation, highlighted the possibility of further operational problems at a Glasgow project, and forecast a long-term fall for power prices.