Shares digital

Bloomsbury (BMY) 152.75p

The publishing house has doubled its full-year revenue on the back of strong sales from the final Harry Potter book. (Read the full story: www.sharesmagazine.com/node/3809)

Shares says: Filling the Potter franchise will be a challenge, no doubt the company has some ideas over re-publishing the books in new editions and the popularity of the films should keep introducing new readers the books for years to come, but that doesn’t mean the company can be complacent over future earnings. It has cut costs and is pushing specialist publishing, as well as signing up what it believes to be the next range of blockbuster books. Time to tread more cautiously. HOLD

Telegraph says: Bloomsbury is doing its level best to put the boy wizard behind it. Although he helped turn the company into a household name, Bloomsbury is hoping that its rather less high profile operations will keep it in investor’s minds. The company has been busy diversifying itself into databases, financial and educational publishing and its online operations. So far, the strategy seems to be working with this weeks numbers coming in ahead of expectations, thanks also to the success of books like The Kite Runner and the River Cottage Fish Book. The company has also cut costs in anticipation of the post-Harry era and currently sits on a healthy cash pile which could be either spent on acquisitions or returned to shareholders. However, the shares still sit on a price earnings multiple of around 16 times which is a significant premium to the rest of the media sector. It needs to demonstrate more sustainable growth before the price is justified. In the meantime, we see little short-term upside. AVOID

The City - Altium says: We struggle to marry the group’s growth prospects with its premium valuation versus other media companies, many of which should produce materially higher EPS growth. Bloomsbury’s cash generative qualities and balance sheet strength remain notable positives in this regard. However, we believe the onus is on management to return cash to shareholders in the absence of significant acquisition activity. HOLD