By Barbara Kollmeyer, MarketWatch
A 65-year old media company is in danger of slipping out of the FTSE 100 when the index reshuffles next week, while a retailer beloved by bargain shoppers may take its place, says an analyst.
Shares of ITV PLC /zigman2/quotes/205378065/delayed UK:ITV +0.26% have slumped nearly 67% this year, losing another 1.3% on Friday. The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.31% traded flat on Friday, and was headed for no change on the week.
The reshuffle is expected to take place at the close of business next Tuesday.
“The Love Island broadcaster’s [ITV] revenue has fallen dramatically as companies have cut advertising spend during the coronavirus pandemic. In March, the company canceled its 2019 final dividend and the group’s market value has fallen 61% this year,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, in a note to clients.
Streeter said ITV could see a turnaround if it can continue to transform into a digital media and entertainment company, with investments into ITV Hub, Britbox and its advertising platform Planet V.
A potential to take its place is FTSE 250 /zigman2/quotes/210598417/delayed UK:MCX -1.57% -listed company B&M European Value Retail /zigman2/quotes/208742159/delayed UK:BME +0.83% , whose shares have gained 23% this year, though they were also down Friday, by 1.7%. The retailer sells branded products at discount prices and expanded to more than 500 stores through the purchase of ex-Woolworth shops, she notes.
“The’ pile it high sell it cheap’ approach as household budgets are squeezed could see it reap the reward of now being promoted to the top flight,” said Streeter.
And if B&M European Value Retail moves up, that would make room on the FTSE 250 for Premier Foods /zigman2/quotes/204105339/delayed UK:PFD +0.21% , maker of Bisto gravy. Those shares have soared 125% this year, as a consumer hankering for comfort foods has grown during the pandemic, and on a well-received strategic review of its pension funding situation, said the analyst.
Potentially getting squeezed out of the FTSE 250 is property developer Hammerson /zigman2/quotes/206876822/delayed UK:HMSO +3.02% , which has suffered as consumers have moved toward digital sales, and its tenants have struggled to keep up with their rent during the COVID-19 crisis.
“It’s already sold off European assets and is planning to raise £826 million ($1 billion) through a rights issue. The demotion, although on the cards for a while, would be a blow particularly as just two years ago Hammerson was in the FTSE 100,” said Streeter.