Shares in publishing house Bloomsbury (BMY) rallied by 4.8% to 369p following stronger than expected first half results. The figures represent the group’s highest ever sales and profits recorded for the first half.

Revenues grew by 29% year-on-year to £12.9 million while profit rose by 225% to £12.9 million. Looking forward Bloomsbury is confident of achieving market expectations for the year (consensus revenue of £193.4 million and profit before tax and amortization of £19.3 million).

THE TREND FOR READING PERSISTS

The pandemic induced lockdowns prompted consumers to start reading more frequently which has benefited Bloomsbury. There had been a concern that this change would prove to be a transitory fad, but today’s results would suggest otherwise.

Bestsellers during the period included Tom Kerridge’s Outdoor Cooking, Piranesi by Susanna Clarke, A Court of Silver Flames by Sarah J. Mass, and the The Priority of the Orange Tree by Samantha Shannon.

There are a couple of reasons to temper enthusiasm despite the encouraging nature of these first half results. First, due to fears over supply constraints and in anticipation of strong demand, retailers and online booksellers have increased their stock levels.

ORDERS PULLED FORWARD

Put simply, there is a danger that Bloomsbury have simply pulled forward future orders into the first half.

Second, the first half is a seasonally smaller trading period, and may not be reflective of the longer term trading outlook. These factors may explain why management has adopted a relatively cautionary stance with respect to the second half.

Numis media analyst Steve Liechti has an add recommendation on the stock and a 400p price target.

Liechti said his ‘inclination is to increase forecasts as our current full year pre-tax profit would imply only £6 million-to- £7 million profit versus a usual year pretty much double this’.

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Issue Date: 27 Oct 2021