Up 6%, can this ‘gritty’ stock continue outperforming the rest of the FTSE 250?
The FTSE 250 is struggling for momentum again as conflict in the Middle East shakes investor nerves. But not all UK mid-cap shares are stuck in the mire. ITV (LSE:ITV) shares were last up strongly in end-of-week trading after releasing full-year trading numbers.
At 83.2p per share, ITV’s share price was last 6% higher on Friday (6 March). Analysts have called the company’s 2025 update a “tale of grit amid gloom” — the broadcaster’s shares are now up 9% over a 12-month period.
What on earth’s been going on at the I’m A Celebrity… producer? And should investors consider buying the FTSE 250 share?
Managing a tough environment
Things haven’t been easy at ITV as tough conditions in the advertising market have hit revenues. It’s also battling against the steady decline of linear TV as streaming services gain popularity. Yet 2025 was a story of resilience as much as anything else.
At £4.1bn, group revenue was essentially unchanged from the previous year. That’s even though advertising sales dropped 5% over the period year on year, to £1.7bn. Adjusted pre-tax profits fell by the same percentage to £448m.
Once again the company’s ITV Studios production unit rode to the rescue to stop sales sinking. Turnover here rose 5% last year, to £2.1bn, a new record high. ITV is ‘making lemons from lemonade’ so to speak, and is exploiting surging demand for content from streaming companies.
It’s also turning the streaming boom to its own advantage through its own ITVX platform. The firm’s invested a fortune in programming and technology, and this is paying off handsomely. Indeed, ITV has recouped its entire investment already and four years ahead of schedule.
As analyst Garry White of Charles Stanley comments, this is “a rare achievement in a streaming industry littered with billionâdollar losses“. The number of active monthly users at ITVX surged 12% last year, to 16.5m.
What could go wrong?
My key takeaway from ITV’s update is that things could have been so much worse. Its performance in 2025 was one that spoke of strong execution in a tough environment. But profits still dropped year on year, and 2026 could be an even more difficult one.
ITV Studios is tipped for “another year of good growth” and another market-beating performance. But advertising sales are tipped to be lumpy, with Q1 total ad revenues set to drop 2% as advertisers wait before ramping up activity in Q2 and Q3 when the football World Cup kicks off.
But could sales here remain under pressure beyond this quarter? I think so, with conflict in the Middle East threatening to send shockwaves across the global economy. This could also see streaming companies rein in spending on content.
Are ITV shares a possible buy?
There’s a lot I like about ITV, and think it’s doing a great job of navigating the streaming age. But will I buy its shares right now?
I won’t, but mainly because of the FTSE 250 company’s valuation. A forward price-to-earnings (P/E) ratio of 13 times doesn’t, in my view, reflect the risks facing this ultra-cyclical stock today. If the ad market falls off a cliff, I think ITV’s high valuation could spark a major drop in its share price.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended ITV. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
