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Key Highlights:
- Bloomsbury Publishing's recent share pullback is seen as an attractive entry point, with potential for future growth.
- The company's consumer and digital resources divisions continue to perform strongly, supported by its "2030 vision" strategy.
- Analysts from Investec and Singer Capital Markets have upgraded profit forecasts and see significant upside potential for the stock.
Bloomsbury Publishing PLC (LSE:BMY), home to best-selling authors such as Sarah J. Maas and JK Rowling, is attracting renewed attention after a modest pullback in its share price. Analysts at Investec view the recent dip as an attractive opportunity for those looking to enter the stock, particularly in light of the company’s strong financial performance and growth prospects.
Bloomsbury’s consumer division remains resilient, and its digital resources arm is positioned to capture long-term growth in academic publishing, according to the bank’s latest note following the company’s interim results. These positive developments are underpinned by the publisher’s strategic "2030 vision" plan, which continues to drive impressive results.
Strong Performance and Prospects
Bloomsbury recently reported its fifth consecutive period of double-digit growth, with revenue up 32% to £179.8 million for the six months ending August 31, 2024. Profits rose 50% to £26.6 million during the same period. This strong performance was fueled by the consumer division, which saw a 47% increase in revenue, largely driven by the popularity of fantasy fiction, including a 102% surge in sales for Sarah J. Maas' titles.
In the academic division, the acquisition of Rowman & Littlefield contributed an additional £7.2 million in revenue. With robust trading continuing into September and October, Bloomsbury now expects full-year results to surpass market expectations. As a result, the interim dividend was increased by 5%.
Bloomsbury’s balance sheet is also well-positioned for future growth. The company’s growing cash reserves support its potential for future acquisitions, and its recent inclusion in the FTSE 250 index has raised its profile among investors.
Upgraded Profit Forecasts
Analysts at Singer Capital Markets praised Bloomsbury’s performance in a note titled "Quality Delivers," highlighting the company's impressive results. They anticipate an average upgrade of 5% to adjusted profit before tax (PBT) across the City. Research firm h2 Radnor also raised its revenue and PBT forecasts by 6% and 5%, respectively, citing Bloomsbury’s strong track record, cash generation, and potential for further upgrades.
Further Upside Potential
Despite recent volatility in the stock, Bloomsbury has delivered impressive long-term gains, with shares advancing almost 90% over the past 12 months and 190% over the past five years. While some may believe the stock has reached full value, analysts see further upside.
Investec values Bloomsbury’s stock at 800p, while Singer Capital Markets has a target of 780p. Investec also pointed out that the stock currently trades at about nine times estimated earnings (EBITDA) for 2025, a figure they believe remains attractive given the company’s potential for consensus upgrades and resilient profit growth.
As a result, both firms consider Bloomsbury’s stock to be undervalued, with Investec noting that its unique position as a listed publisher adds to its scarcity value. The consensus is clear: Bloomsbury continues to be a strong performer with further upside potential.
