Scottish broadcaster STV (STVG) gains 2.5% to 375.8p on a robust set of first half numbers which show a 90% year-on-year rise in earnings from its digital operations.

There is also a strong contribution from its production business with revenue in this area doubling to £3.5 million. STV expects TV national airtime revenue to fall 6% in the third quarter, which would imply national revenues down 3% year-to-date. However, this slowdown is mitigated thanks to the terms of its commercial deal with ITV (ITV).

We previously highlighted the potential for improved cash returns from the business once the triennial valuation of its pension scheme had been concluded. The company had previously indicated a settlement would be in place by the end of the first quarter – now it is aiming for the end of Q3.

Numis analyst Paul Richards, who moves to a ‘buy’ recommendation and 442p price target, says: ‘Given the revised airtime agreement, which provides downside protection, and the transformed balance sheet, we believe STV shares have been unfairly punished post-Brexit and offer strong value.’

Issue Date: 25 Aug 2016