Must read: ITV, Aviva, US jobs report

ITV – Thursday 5 March 

Richard Hunter, Head of Markets, interactive investor says, “At the third quarter numbers in November, ITV (LSE:ITV) noted that a 9% decline in advertising revenue for the final quarter was likely, given the uncertainty around the Budget, although cost savings of £35 million would cushion some of the blow. In addition, guidance for the full-year was maintained, pointing to total organic revenue growth of 5% with a margin in a 13% to 15% range.

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Overall, there are some signs of progress. Historically the group had an equal weighting between TV advertising revenues and its Studios business and long since recognised that the gradual decline of terrestrial viewing would increasingly weigh on the former. ITV now reports that the majority of its revenues are coming from its content production and digital lines, demonstrating that a lesser reliance on traditional advertising revenues is being achieved.

Alternative revenue streams such as the Studios unit and ITVX are showing signs of picking up the slack over the longer term. The Studios business has had a stream of quality content which it has been able to distribute both within the UK and overseas, with perennially popular shows such as Line of Duty made for other production companies.

Another area of growth is the ITVX unit, where digital advertising revenue spiked by 12% to £556 million, with a shorter term target of £750 million, propelled by the popularity of the likes of Love Island. The group previously noted that it expected to recoup the cumulative investment in ITVX by the time of these results, which would be well ahead of plan.

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However, whether the group survives in its existing format remains to be seen. The day after the third quarter numbers, ITV confirmed that it was in talks with Sky over a potential £1.6 billion sale of its Media and Entertainment business, which would include ITVX as well as its free-to-air channels. The shares spiked on the news, although engagement between ITV and Sky has reportedly slowed over recent weeks.

Aside from such a deal should it happen, and a punchy dividend yield of 6.3%, investors have been skittish on prospects, with ITV flitting in and out of the FTSE100 over recent times. Although the shares have risen by 36% over the last two years, more recently a gain of 5% over the last year is more pedestrian, and the immediate prospects are clouded by the Sky talks. Overall, in investment terms, ITV has tended to be a tough watch, weighed down by the endlessly deep pockets of some of its competitors in the streaming space.”

Aviva full year – Thursday 5 March 

Richard says, “Aviva (LSE:AV.)’s growth strategy is going from strength to strength, with its move towards a more capital-light business - driven in part by selective bolt-on acquisitions – lighting a fire under future prospects.

Its recent purchases of AIG Life UK, which boosted its protection presence, and Probitas, which provided exposure to the Lloyd’s of London market and an estimated addressable market of £200 billion of distribution opportunities, were important and timely moves. This was then trumped by the announcement of the Direct Line acquisition, which will further cement Aviva’s leading positions particularly in the home and car insurance markets and will result in Aviva having 21 million UK customers. 

The third-quarter numbers in November revealed that General Insurance premiums rose by 12% to £10billion over the first 9 months, driven by 17% growth in UK & Ireland and helped by the inclusion of Direct Line. Wealth net flows increased by 8% to £8.3 billion, while Health premiums, a clear area of prospective growth, jumped by 14%, while its solvency coverage ratio stood at an extremely healthy 206%. While the costly cash requirements of the Direct Line deal have prevented recent share buybacks, these are expected to resume in March. Meanwhile, the dividend was increased by 10%, leading to a projected yield of 5.7%, more than adequate compensation for shareholders in the interim. 

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Aviva is continually looking to strengthen its suite of products while also edging towards a more capital-light framework, where it estimates that more than 70% of profit will fall under this description on completion of the Direct Line deal, improving on the 66% level already in place. In the meantime, its leading position in growing markets, diversity by product and geography and financial strength have all been recognised in its share price appreciation of late. Indeed, there may be scope for a further rerating should the group complete the switch from being regarded as a general insurer rather than a pure life insurer, which tends to carry higher price valuations.

The group is still targeting £2 billion of operating profit which should be confirmed in the full-year results, driven not just by geographical diversity, but also a presence in the increasingly popular lines of private health and life insurance, while the group’s reach continues to provide exposure to most insurance outcomes. 

The obvious attractions of a group which continues to play to its strengths has resulted in the share price having risen by 30% over the last year, and by 84% over the last five years, with investor appetite for the group and its prospects apparently undiminished.”

US Jobs report – Friday 6 March 

Victoria Scholar, Head of Investment, interactive investor says, “US nonfarm payrolls data is typically quite volatile, but recent changes to the methodology have exacerbated the data’s ups and downs. 

Consensus is for around 70k to 80k job additions in February, a notable decline versus last month, with most if not all job additions coming from the private sector, as Federal cuts and DOGE redundancies continue to weigh on government payroll changes. There is also the potential for last month’s blockbuster reading to be revised lower as the initial data collection took place before the severe winter storms.

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January was surprisingly strong with 130,000 job additions, the highest since December 2024, surging past economists’ expectations and a sharp increase month-on-month. The unemployment rate also eased to 4.3%, again painting a positive picture of the US labour market. 

The broader view is that private sector payrolls have been improving since Q3 last year, while public sector jobs have been clouded by deferred DOGE resignations from early 2025.”