Shares in Itv underperform over three months

Shares in Itv (LON:ITV) have underperformed the market over the past three months, signalling uncertainty on the part of investors.

Based on relative price strength against the market, the company's shares are down by -28.4% over the past three months. They are currently trading at 60.92p.

That performance comes after a turbulent period for the UK's main indices. Shares sold off heavily in March over fears about the impact of coronavirus. Markets have trended higher since, but the earnings outlook remains deeply uncertain.

The concern for Itv is that weak recent price momentum could turn into a prolonged downtrend. That's because research shows that price momentum is a leading predictor of future performance...

Trading the trend

Strategists like James O'Shaughnessy, William O'Neil and Charles Kirkpatrick have argued that relative strength can be one of the most consistently useful pointers to growth.

Price momentum is heavily influenced by psychology, with investors under-reacting and subsequently over-reacting to company news, driving prices higher over time.

The catch is that investor sentiment is prone to wild swings, which makes momentum risky when used on its own. Combining it with other factors, like attractive valuation, high quality and low volatility, can help reduce that risk.

Overall, the downward trend in the share price of Itv over the past three months means that investors should be cautious.

Is it time to buy or sell?

Shares in  () have underperformed the market over the past three months - but is that fair? There could be valid concerns about the future, but investors might have over-reacted...

To get a better understanding, it's worth looking at whether the shares are now cheap or expensive, and whether analysts have now changed their forecasts. You can find that out with the company's Stock Report on Stockopedia.