Irish advertising market will recover ‘lost ground’ this year, forecasts Davy

Investors keen on buying media shares would have enjoyed a decent year on the stock market in 2014, with the FTSE Eurofirst 300 media index rising 10.9 per cent compared with a rise of 4 per cent for the broader FTSE E300.

And with the Irish advertising market likely to be able to reclaim some of its lost ground in the coming years, stock- pickers could do worse than take a punt on one of the listed companies most exposed to it – namely Independent News & Media (INM), a Davy Research report published this week claims.

Having substantially underperformed its global counterparts in recent years, the Irish advertising market is well placed to recover in tandem with a strengthening domestic economy, it notes.

But its forecasts are not entirely upbeat. “Despite the positive signs, the Irish advertising market recovery remains volatile,” it warns. Much will depend on how traditional media businesses manage to transition to digital.

Coming from a somewhat low starting point, INM was the best-performing media stock on Davy's radar in 2014, gaining 17.4 per cent, with the expectation being that it will continue to whittle down its net debt in 2015, after "impressive" cost discipline – cuts – last year.

The business plans of its new senior management team, chief executive Robert Pitt and chief financial officer Ryan Preston, will be "eagerly anticipated in 2015", Davy's analysts say.

Both Pitt and Preston joined INM last year from beleaguered retailer Tesco, a company where the new top management must surely be all too happy to leave 2014 behind.