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ITV (LSE: ITV) stock’s risen around 10% since 23 July and is now trading near a 52-week high. Despite this, it remains 69% lower than a decade ago. So I’m wondering if I should add this value stock to my ISA.
Better-than-expected H1
The recent share price pop came after the FTSE 250 broadcaster delivered its first-half results on 24 July. Revenue fell 3% year on year to £1.85bn, with total advertising revenue down 7%. Adjusted earnings before interest, taxes, and amortisation (EBITA) slumped 31%.
At first glance, this may seem surprising. Why would the stock rise after seemingly underwhelming results? Well, context is key. ITV beat consensus forecast for an 8% decline in advertising revenue, and it was facing tough comparisons from the Men’s Euros football tournament last summer.
Elsewhere, streaming platform ITVX continued its strong performance, with digital advertising revenue up 12%. Management said the firm’s on track to deliver at least £750m of digital revenues by 2026, up from £482m last year. And it has already recouped its entire investment on ITVX.
Meanwhile, the Studios division did well. Revenue grew 3% to £893m, with external revenue up 11%, driven by strong demand from global streaming platforms. Creative successes included Sneaky Links: Dating After Dark for Netflix, Shark! Celebrity Infested Waters for ITV, and Love Island USA for Peacock.
To bolster its production, ITV snapped up independent scripted producer Moonage Pictures, which made The Gentlemen, as well as a Spanish scripted producer.
CEO Carolyn McCall commented: “ITV Studios continues to see positive momentum, with strong growth in external revenues in H1, driven by content for the global streaming platforms, including The Devil’s Hour for Amazon Prime Video, and Run Away for Netflix.”
Finally, ITV announced an additional £15m in non-content cost savings, bringing the total for 2025 to £45m.
Zoo 55
Another thing worth mentioning here is Zoo 55. This is its newish Studios label designed to drive ITV’s digital content across global platforms. Part of this involves transforming content into short‑form clips tailored for modern viewing habits on YouTube and social media.
On TikTok, for example, Love Island content has now generated over 7bn views globally. Zoo 55 operates over 160 owned YouTube channels (Hell’s Kitchen’s perfect for this format, given Gordon Ramsay’s volcanic, meme-worthy outbursts).
All this is making the firm’s content more discoverable, expanding its ad revenue, and reaching younger audiences. ITV’s confident Zoo 55’s high-margin revenue can double from £60m in 2024 to around £120m in 2027. So this is undoubtedly positive.
For those wondering, the name’s a nod to YouTube’s first uploaded video in 2005 and ITV’s 1955 founding.
Great value?
Given all this then, are ITV shares at 85p just too cheap to ignore? Potentially yes, as the forward price-to-earnings ratio is just under 10. Throwing in the 5.8% dividend yield, I can certainly see the appeal here.
However, ITV’s still experiencing a structural decline in TV broadcast advertising. This is why despite all the positive bits (Studios, ITVX, Zoo 55, etc), revenue’s only expected to grow 1-2% over the next couple of years.
Due to this sluggish growth and the formidable streaming competition from Netflix and Amazon, I won’t be buying ITV shares.
