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The Markets
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Proactive UK has moved.
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The Markets
by Proactive
Proactive UK has moved.
Small-cap coverage continues on .com
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The Markets
by Proactive
Proactive UK has moved.
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Investments and investor services

The £136mln Love Island effect and why the reality ITV show could move the dial for the broadcaster

In the afterglow of the show's ratings success, shares in the broadcaster are up 2%, adding £136mln to ITV's market value

There was no change in recommendation or target price, just a gratuitous mention of the reality show du jour - Love Island.

And it has worked for broker Liberum, which was plugging ITV PLC (LON:ITV) in the afterglow of the opening instalment of the sun, sex and shady deeds drama, which beat all ratings expectations.

READ: ITV mulling £1bn joint venture with the BBC to acquire half of Dave broadcaster UKTV

Okay, the audience number for Monday's curtain-raiser was only 2.9mln; but for ITV2, one of the also-ran/niche Freeview channels, this represents a huge success, with advertisers reportedly falling over themselves to sponsor the show.

Mood killer

Here Liberum spoils the mood slightly by going ‘all City’ with its analysis, ignoring who might pair with whom (btdubz, loving fellow Geordie Adam’s impact in the show).

“The new series of Love Island has got off to a tremendous start with the opening programme audience even exceeding last year’s grand-final,” it said in a note to clients.

“This should bode well for both the June and July TV advertising numbers and also the high margin ITV Online VOD [video on demand] revenue numbers, which grew 41% in the first-quarter and where there is a strong chance of even higher growth in the second.”

Not-so-muggy price target

Liberum reckons Love Island has the potential to move the dial for the free-to-air broadcaster’s net advertising revenues, which are predicted to decline 1-2%.

“Any upgrades are likely to drive a re-rating [of the stock],” it added.

Liberum says ‘buy’ ITV shares up to a target price of 265p a share.

The stock is currently changing hands for 171p, after receiving a Love Island bump of 2%, adding £136mln to the value of the business.

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