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Shares are trading on 12x FY26E PE, representing a c.30% discount to the five-year average. While we expect the external trading environment for Academic to remain subdued in the near term, we see several positive catalysts in Consumer that could boost the share price into next year. We maintain our 815p TP and Buy recommendation.
Bloomsbury Publishing Plc
Today’s AGM update highlights a positive outlook for the year. In Consumer, this is helped by a strong front list. In Non-Consumer, the integration of Rowman & Littlefield is making good progress. We also note the group’s first deal to monetise Bloomsbury’s Academic IP. Management are confident in delivering FY results in line with consensus expectations. Overall, this is a reassuring statement which should be taken well. Following a weak share price performance in recent months, the share trades on a FY26e PER of 13x with a FCF yield of 7.3%, strong signals of value in our view. BUY reaffirmed.
Robust delivery: In a trading update ahead of today’s AGM, BMY confirmed it expects to deliver FY results in-line with current market expectations. No growth rates are disclosed by division, but in Consumer management note that Sarah J Maas is once again topping bestseller lists in the US and UK, that the Pocket Potter series is due to start in August and that BMY has a strong front list for the remainder of the year. In Non-Consumer, the integration of Rowan & Littlefield continues to progress well, with 5300 titles now digitised and included within Bloomsbury Digital Resources. In addition, management note the signing of their first non-exclusive AI content partnership, demonstrating the value of their content (and providing a new route to monetisation of it) – albeit we believe the exact quantum of benefit is still to be confirmed. Confidence in the future: Looking further out, we see a number of highly attractive growth opportunities for Bloomsbury. In the short-term, we note the recent announcement by Sarah J Maas that the first draft of her next book has been completed (with its publication not reflected in our forecasts currently) – there is no indication of a publication date, but clearly a positive milestone / sign of progress. In the longer-term, management highlight the recent opening of a new office in Singapore to help the company target the structural growth in student numbers in Asia, and a growing net cash position should support accretive M&A down the line. With this backdrop, management reiterating their confidence in the company’s future prospects as they work towards the Bloomsbury 2030 Vision is very justifiable and no surprise. Equity mis-priced: Forecasts unchanged. The stock trades at just 7x CY26E EBITDA, very much at the low end of historical ranges, which in our view is fundamentally unjustified given the longer-term structural levers of growth and the scope for eventual upward revisions to earnings.
Bloomsbury’s AGM update can best be characterised as reassuring and follows on from the solid tone of the outlook statement at the FY25 final results in May. FY26 market expectations have been confirmed and as a result we are making no changes to our FY26E and FY27E estimates. Within the update; two points stand out. Firstly, the signing of Bloomsbury’s first AI content partnership. The potential for such a deal had been flagged at the final results so it is good to see this crystallise. We would expect further detail at the H1 results and we make no initial assumption around value. The second point relates to Rowman & Littlefield and the initial tranche of BDR integration. This is a key element of the R&L strategy, so again encouraging to see good progress here. The reassuring tone of the update should shine a spotlight on the attractiveness of the Bloomsbury valuation, with a FY26E PER of 12.6x and a 3.3% dividend yield.
The shares are over 20% down since the results, which feels overdone in our view. While there are clear headwinds on the academic side, we believe there are enough catalysts in consumer over the next 12 months to offset the risks. The shares are trading on 13x FY26E PE, 28% lower than the five-year average of 18x. We maintain our Buy rating and 815p TP.
There were limited surprises from the results today. The company benefits from its ‘Portfolio of portfolios’ – despite the prolonged softness in the academic publishing market, Consumer continued to deliver. The shares are trading on 16x FY26E PE. We reiterate Buy, TP 815p.
Delivering again: FY25 revenue of £361m was up 5% (flat organically), with PBT of £42m – both were slightly ahead of even the previously revised consensus. EPS at 41.45p was notably ahead, helped by a lower tax rate, and the FY dividend grew 5% to 15.43p, supported by the strength of the balance sheet (YE net cash £17m). By division, Consumer grew 3% (despite 49% growth the previous year), whilst Academic Publishing was down 10% organically – but the key Bloomsbury Digital Resources business was up 2%. More broadly, the group’s performance in a year with no new Sarah J Maas title shows the strength of the diversified content offering. Looking to the future: In the near-term, management highlight that trading is broadly in-line with consensus expectations on a constant currency basis. From a strategic perspective, budget headwinds remain in academic publishing, but we note that management are progressing opportunities to monetise their academic content via AI licensing deals and that there are increasing efforts to target the longer-term global opportunity in higher education with the opening of a new office in Singapore. Separately, the company has announced that the CFO is stepping down after 7 years in the role to focus on a portfolio career – we would expect a smooth and orderly transition to a future successor in due course. Attractive valuation: On forecasts, we tweak down revenues 1-2%, reflecting dollar weakness and broader macro uncertainty, and we more prudently cut PBT by 8 / 12% in FY26/27E. The stock is trading at c9.5x CY26E EBITDA on our new forecasts – we continue to believe this is a fundamentally significant undervaluation given the structural growth opportunities for growth the business has, supported by its virtuous flywheel.
Bloomsbury’s final results have come in ahead of our previously upgraded expectations, driven by a strong performance across the Consumer portfolio. As previously flagged, Academic & Professional is facing a tough market but we do note the positive contribution from Rowman & Littlefield, organic growth from BDR and a good margin outcome. Coupled with a lower than expected tax charge, adjusted EPS has come in +9% ahead of our expectations. The outlook statement points to a solid FY26, broadly in line with market expectations. Given the strength of Bloomsbury’s North American performance, US dollar weakness will be a headwind and we factor that into our estimates. The reference to progress being made on monetising academic content through AI, as well as the opening of a new Singapore office to target student growth outside of established markets, should be well received by the market.
Limited tariff impact In recent days, trade press publication ‘The Bookseller’ has reported on the recent tariff announcements in the context of the publishing industry. It notes that printed books may be exempted from tariffs under the First Amendment, linked to freedom of expression, with printed books included in an annexe of exemptions within the tariff announcements. We would also note our belief that the vast majority of print books – particularly for major consumer titles – are printed locally in the US, albeit with just modest risk of increased input costs for any non-US sources of paper. Fundamental resilience of demand More generally, as investors consider the broader impact of dampened economic growth on companies, we would note the impressive underlying resilience of demand in Bloomsbury’s markets. Consumer publishing was very resilient through the financial crisis (reflecting that books provide significant value in terms of entertainment time relative to cost, when set against other activities), and saw demand strengthen through the pandemic – in part reflecting the importance of escapism in troubled times, which may well be relevant today. In Academic publishing, whilst institutional budget pressures linked to enrolment numbers have been flagged previously, we would note the counter-cyclical aspects of the US higher education market, with enrolment numbers historically accelerating in times of recession (particularly in the community college). Mispriced equity The shares have fallen c.19% thus far this year, broadly in-line with the likes of Informa (Buy, TP 950p) – we recognise the headwinds to sentiment across the wider market currently, but believe this is fundamentally unjustified given the likely lack of impact from tariffs and the structural growth that the business has as a result of its ‘virtuous flywheel’ (with content demand fuelling content acquisition to drive further demand). We believe Bloomsbury warrants a significantly higher valuation than the <7x CY25E EBITDA it trades at today, and it remains a key sector pick.
Bloomsbury delivered another beat to market expectations, despite the strong prior year comps in Consumer and the ongoing headwinds in academic publishing. The shares are trading on c.14x FY26E PE, which remains below the stock’s five-year average of 16.5x. Reiterate Buy.
Today’s confirmation that trading in H2 FY25 has been better than expected should provide a justified boost to Bloomsbury’s share price. The positive momentum that drove estimate upgrades at the half year remain very much in place and we are upgrading our FY25 PBT expectations by a further +6% in response to today’s update. The key takeaway for us is the reference to the “broadly based” performance across the Consumer portfolio. Our read of this is that the better than expected performance is not being driven by one author, or genre. This is the natural outcome of the “portfolio of portfolios” strategy that underpins Bloomsbury’s approach to diversification and re-investment. It has also helped Bloomsbury weather more difficult conditions in its Academic markets, with Rowman & Littlefield making a full and positive contribution. In terms of consensus estimate momentum, Bloomsbury is the best performing stock in UK media, which is not reflected in the share price YTD.
Bloomsbury continued its ‘meet and beat’ trajectory in FY25, despite the strong comparable in FY24 and the subdued academic trading backdrop. It is encouraging to see the good performance in Consumer across the portfolio and the progress being made with the Rowman & Littlefield integration. The shares trade on 15x FY26E PE, 9% below the five-year average of 16.5x. We reiterate Buy, TP 815p.
FY results ahead, again: Bloomsbury today has released another impressive FY trading update, with results expected to be ahead of expectations given the strong H2 performance. Management highlight the success of the Consumer division, with bestsellers across a range of categories and note that the successful integration of recently acquired Rowan & Littlefield is driving growth in Non Consumer. Bloomsbury Digital Resources is in growth for the FY despite previously noted budget pressures in academic publishing. Flywheel getting bigger and stronger: Cash generation from this performance has allowed Bloomsbury to pay down the first $7.5m tranche of debt used for the acquisition ahead of schedule, but arguably even more importantly, supports the virtuous flywheel – underpinning more content acquisition over the medium term (organically or via M&A) – we now forecast net cash of £17m at YE. As the company moves towards the 2030 Vision, we believe this flywheel is set to accelerate – with both major releases and the eventual support for demand from movies/TV series still to come, the new Spotify contract providing incremental routes for monetisation in Consumer, and potential AI licensing deals able to do the same in academic publishing eventually. Fundamentally the wrong price: We increase revenue by 7% and PBT by 4% in FY25E but leave estimates broadly unchanged from FY26E onwards at this stage. Having de-rated notably in the past few months, the stock now trades at just 7.5x CY25E EBITDA, very much at the low end of its historical range. With the long-term structural drivers of resilient profit growth undimmed, we believe this grossly undervalues the company.
We initiate coverage on Bloomsbury with a Buy recommendation and an 815p target price. In this note, we discuss why we believe Bloomsbury has the recipe for continued success, the intrinsic value within the business, and the growth prospects ahead. The shares trade on 16.5x FY26E PE.
A new record: Bloomsbury has today reported impressive H1 revenues of £179.8m, up 32% yoy (or 26% organically), driving PBT growth of 50% to reach £26.6m. By division, Consumer saw another stellar performance, with revenues up 47%, underpinned by >100% growth in Sarah J Maas sales. Non-Consumer grew 3% overall, supported by the recent acquisition of Rowman & Littlefield (where the integration continues to progress well), but Academic & Professional saw a 14% organic decline, given budget pressures in the UK as a result of falling international student volumes and in the US from lower enrolments at smaller institutions. Encouragingly, management note that demand from key elite institutions remains strong and that the digital BDR business grew 2%, as the market continues to shift online. A bright future: On the outlook, management note that whilst the business faces tough comparables in H2, the combination of a strong H1 performance and good trading through Sept/Oct means they now expect to deliver FY results ahead of consensus. Fundamentally, the virtuous flywheel in place at Bloomsbury continues, but we also see other encouraging signs for profit growth over the medium-term – our forecasts contain no assumption of a new SJM title being published as yet (despite 6 being contracted) and cost actions are being implemented to protect profitability in A&P. Fundamentally mis-priced: We increase our revenue and profits forecasts by 4-5% this year, but leave forecasts for FY26E onwards unchanged. The stock trades at c.9x CY25E EBITDA – we believe this is too low given the scope for consensus upgrades over time, the resilience of profit growth and the scarcity value of this unique listed equity story. We continue to see significant upside – hence Bloomsbury remains a key sector pick.
Bloomsbury has not only reported a very strong set of H1 results, but it has indicated that the full year outcome is now likely to be ahead of consensus expectations. The portfolio effect within the group has seen momentum within Consumer maintained and more than offsetting a challenging budgetary environment within the academic market. The strength and breadth of the Consumer performance is particularly impressive, even after a stand-out FY24. Although H2 will not benefit from a new Sarah J Maas title, this will be a year where contributions across a range of authors and across front and backlist come to the fore, demonstrating the portfolio of portfolios approach in action. Beyond the challenging academic market backdrop, Bloomsbury Digital Resources continues to grow and remains on track for the FY28 target of £41m of revenue. The Rowman & Littlefield acquisition has contributed in-line with initial expectations and represents a significant future growth driver. The FY25 PE of 19.2x and EV/EBITDA of 11.0x continue to look attractive for a group showing consistent momentum and future upgrade potential.
Bloomsbury is a story beyond the bestsellers, one of strategic re-investment and consistent management focus on portfolio expansion and diversification over a long period of time. A strong track record of material free cash generation has underpinned investment back into deeper content, portfolio (including acquisitions) and people, driving growth. The result is a well-diversified, digitally enabled publishing group with strong go to market propositions across consumer and academic markets. This deliberate shift has resulted in an acceleration of returns and a visibly higher quality of earnings and cash-flow. Bloomsbury has delivered diversification whilst generating growth across a broad range of metrics and strong cash-flow. This strong balance sheet has then enabled acceleration and acquisitions without diluting shareholders, a virtuous circle of cash generation and investment which has continued with the recent acquisition of the academic assets of Rowman & Littlefield. This track record has culminated in FTSE 250 inclusion. The current valuation remains relatively undemanding for such a quality track record and we can see much that is still not captured within the current price, nor expectations.
Strong performance thus far: As we have come to expect, Bloomsbury management highlight that they have delivered another period of strong performance thus far this year, with trading in-line with recently upgraded expectations (as a result of both operational performance and the recent acquisition). The Consumer business has continued its trajectory of impressive performance, supported by a number of bestsellers – and management highlight a number of potential bestsellers to come over the summer. The flywheel keeps going: In Non-Consumer, management note the continuing growth in Bloomsbury Digital Resources (BDR), and the expanding scale of their ambition there with a newly raised revenue target post the transformational acquisition of Rowman & Littlefield’s academic publishing business. We believe the integration of this asset is going well, and that the strategic benefits are still to be fully appreciated. More broadly, having a ‘portfolio of portfolios’ helps support the turning of the flywheel we have long argued is in place at Bloomsbury – with successful investment in content driving cash generation to fund investment to drive future growth (and cash returns). Upgraded forecasts underpinned: At this stage of the year we leave our key underlying assumptions unchanged, despite the strong performance, with no changes to revenue or PBT. We nudge up our SOTP-based target price to 800p. Bloomsbury currently trades at c.9x FY25E EBITDA – we continue to believe it remains significantly undervalued given the scarcity of the asset and the robust profit growth the business can sustainably deliver.
Academic publishing expansion: Following on from its impressive results last week, Bloomsbury has today announced the acquisition of the academic publishing assets of US publisher Rowman & Littlefield, significantly expanding and strengthening the group’s academic publishing business to create a truly leading market position in areas such as arts, humanities and social sciences. We believe this is highly attractive strategically, providing the opportunity for BMY to deploy the content into its digital resources platform, alongside cost synergy potential. Attractive financials: The acquisition involves an eventual purchase price of c.£65m – the business being acquired having generated revenue of £28m and PBT of c.£5m in CY23 – with the purchase being financed from existing cash resources and a new debt facility. The deal is expected to be accretive in the current year, and significantly accretive in FY26 onwards. Reflecting the synergy opportunities, management have increased the BDR revenue target for FY28 to £41m, from £37m. Although Bloomsbury is likely to sustain a FY net cash position, we would now expect a hiatus on further M&A as the business is integrated into the wider group. Accelerating on the road to 2030: On our forecasts, we increase revenues by c.10% longer-term as the acquisition impact annualises, which leads to a c.12% increase in earnings, underpinning our target price increase. Bloomsbury now trades at <8x CY25E EBITDA with a PE of <14x – with an increasingly resilient revenue trajectory, we see this as notably undervalued for such a scarce, high quality equity.
Breaking records: Bloomsbury FY results have once again broken records – with growth of 30% leaving revenues at £343m and PBT up 57% to £49m, 4% ahead of even recently upgraded forecasts – management highlight the performance reflects the broader strategy of entrepreneurial diversification. By division, Consumer was the standout, with revenues up 49% on the back of demand for Sarah J Maas. Non-Consumer fell 4% given the impact of the unwinding of excess US academic funding, but encouragingly BDR saw a re-acceleration to 2% growth for the FY, after declines in H1. Bloomsbury ended the year with net cash of c.£66m, and this underpinned impressive yoy FY DPS growth of 25% - fundamentally reflecting confidence in the business. Trading for FY25 is expected to be slightly ahead of the current consensus. The flywheel keeps spinning: Most impressive however in our view are the prospects for Bloomsbury longer-term – although no new title is expected from Sarah J Maas in fiscal FY25, we believe she is increasingly becoming a sustainable, global source of demand, and the strength of the balance sheet provides meaningful potential upside to forecasts once deployed for accretive M&A. Looking further out, the Bloomsbury 2030 strategy is a re-iteration and evolution of the recent strategy, re-enforcing the growth prospects we have long believed in. Plenty more to go for: On forecasts, upgraded underlying assumptions underpin an increase of mid-single digits to revenues and profits, and this underpins our target price increase to 700p. Bloomsbury currently trades at c.9x CY25E EBITDA – we continue to believe significant upside remains as forecasts and multiples both expand. For us, Bloomsbury remains a key pick in the sector (as set out here).
Positive trading update ahead of Feb year-end with revenue/profit significantly ahead of market expectations driven by the new Sarah J Maas release on 30 Jan. This drives a material profit upgrade in the current year, though we do not change next year’s numbers for now as there is no official comme
Always delivering: Bloomsbury have released another impressive trading update this morning - revenues and profits are expected to be significantly ahead of consensus expectations. This in large part reflects the exceptional performance of the Consumer division, where the latest Sarah J Maas release in late Jan has already reached the top of bestseller lists in the US, UK and Australia. Management note the broader beneficial impact this has had on backlist demand for her titles, and the six future titles already contracted. Growth potential builds: From a broader perspective, management highlight the growing strength of their footprint in the structurally expanding fantasy genre - this is only likely to continue, in our view, given the potential support from related TV / film productions likely to appear over the medium-term. The growing net cash position (INVe >£60m at YE) will provide support to further organic investment in content and inorganic expansion in Academic publishing. We expect further details on all these topics at the full results on May 23. Fundamentally undervalued: Bloomsbury currently trades at <8x CY24E EBITDA – we continue to believe this is a significant mispricing given the resilient, accelerating growth the business can deliver over time. We increase revenues by 13% for FY24E and PBT by 31%, but leave forecasts for FY25E onwards broadly unchanged at this stage. Bloomsbury is one of our key sector picks for 2024.
Updating for yesterday's positive trading update. FY24E adj FD EPS c. +12% with limited change in FY25E forecasts assuming no Sarah J Maas release in that year. ADD - BMY has performed well through/post covid and tougher macros, as books are seen as affordable luxuries. Internally driven momentum h
Trading update ahead, again: Bloomsbury has today reported another impressive trading update – revenue is now expected to be comfortably ahead of market expectations, with profits materially ahead. This reflects exceptionally strong trading in the Consumer division, particularly demand for Sarah J Maas; the Non-Consumer division continues to trade in-line with expectations. A diversifying portfolio: More broadly, Bloomsbury’s strategy to accelerate its virtuous flywheel continues to deliver – alongside Sarah J Maas, a number of other key authors have contributed to robust demand, notably titles by Tom Kerridge, Martha Mumford & Katherine Rundell (amongst others). Fundamentally under-valued: In terms of forecasts, we increase revenues by 6% in FY24E and profits by 13%, but estimates in FY25E are more modestly changed, with revenues flat versus our previous estimate and profits up 4%. Bloomsbury currently trades at <7x CY24E EBITDA - we continue to believe this significantly undervalues the resilient revenue and profit growth the business model can deliver, augmented by accretive M&A over time.
Meeting Notes - Oct 30 2023
BMY TRUEB FGFH FRSX FSFL FTN FTF FTD FTSV FTV FSF FSG FGFH FELPU PFD ELM RHIM SXS TCAP
Updating figures post 1H figures on Thursday 26 October. Operational forecasts net unchanged (with a mix shift to Consumer vs A&P), but non-operational factors (interest/tax) imply FY24/25E EPS +10%/+5%. ADD - BMY has performed well through covid and tougher macros, as books are seen as afforda
With H124 revenue of £136.7m (+11% y-o-y), Bloomsbury is on track to meet FY24 expectations, with a particularly good H1 from Consumer and within that, from the children's list, where sales of Sarah J Maas titles were up by 79% y-o-y. Momentum appears likely to be sustained in H2 as her next book is set for publication in January. Non-consumer growth was more muted, against tough comparatives. It is here that Bloomsbury stands to benefit most from the shift to digital, notably in the US school and college markets, albeit these have had some short-term funding hiccups. Management has focused on the most important fundamental – building an extensive resource of high-quality content in readily accessible formats. This is driving the subscription revenues and high retention rates that underpin its growth plans. Cash resources of £39.1m at end August should enable further content acquisition to drive the top line.
Impressive growth: Bloomsbury has once again delivered double digit revenue & profit growth in H1 – revenue grew 11% to £136.7m, with profit also up 11% to £17.7m. EPS grew 14% to 17.47p, with net cash at £39.1m. Management note that they see significant opportunities for acquisitions, with the ‘virtuous flywheel’ we have previously highlighted of cash generation and investment continuing to take effect, and the ongoing diversification strategy is increasingly smoothing profitability during the year, leading to a rebalancing of the dividend (H1 now 3.7p). Consumer growth, Non-Consumer resilience: By division, Consumer saw 17% revenue growth in H1, supported notably by 22% growth in Children’s, with both Sarah J Maas and Samantha Shannon seeing impressive growth in demand in the fantasy segment. Non-Consumer grew 2%, with Academic & Professional consolidating its revenue base post significant BDR growth last year and against a backdrop of normalised government funding for academic institutions post Covid. Subscriptions increased further to become 47% of total BDR revenue and the business is on track to meet the 5-year 40% organic growth BDR target. Equity under-valued: Overall, management note they are confident in achieving the Board’s expectations for the FY, and we leave forecasts broadly unchanged (barring benefits from a lower tax rate in the current year). Bloomsbury currently trades at <7x CY24E EBITDA – we believe this fundamentally mis-prices the company and the resilient profit growth we expect it to deliver over the medium-term.
CMD yesterday showcased Bloomsbury Digital Resources (BDR), the fast growth online academic & professional business that BMY has grown organically from a standing start in 2016. BDR highlights good growth momentum and ambition in the overall BMY business, even allowing for (potentially near-ter
Bloomsbury Digital Resources in focus Bloomsbury yesterday afternoon hosted a very well attended investor event focused on the Bloomsbury Digital Resources (BDR) platform that has been built in recent years, and the gear change it provides for the overall group in terms of revenue growth, diversification, and resilience. BDR revenues grew 41% in the last financial year, and helped drive Academic & Professional to c.40% of group profits - management are targeting another 40% organic growth for the business in the next five years. This growth, at the very least, should provide significant headroom for ongoing investment to drive future growth. A scaleable platform The platform has a number of fundamentally attractive characteristics, in our view: it allows highly repeatable direct subscription sales to customers without loss of margin to aggregators, it allows newly developed proprietary content to be easily distributed to the customer base, and for new customers to be easily added. The expanded sales infrastructure is helping drive these up significantly, yet BDR still only serves broadly half of the global higher education institutions and <20% of US schools. The platform effect works inorganically too - we expect a continuation of Bloomsbury's active M&A strategy here, acquiring relevant content sets that can be digitised and distributed more widely on it, providing significant revenue and cost synergies. The virtuous flywheel keeps going We wrote post the recent FY results (as many times before) that the virtuous flywheel in place at Bloomsbury overall continues to drive the impressive track record of performance in recent years - and BDR is a prime example of this in action, with previous investments in high quality content underpinning the growth and cash generation that can fund future opportunities (whether organic or via M&A). We believe this is not properly reflected in the current valuation at <8x CY24E EBITDA - we re-iterate our Buy and 575p target price.
FY figures (to Feb) are good/slightly above forecast with strong trading vs. tough comps plus some FX benefit. No material net change to forecasts expected. While global macros imply pressure across most areas, book sales tend to be resilient and internal BMY momentum is good. Ideally, we would lik
Records keep falling: Bloomsbury have today reported record FY results – revenue of £264.1m (reflecting 9% organic growth) and PBT of £31.1m (+16%) were both ahead of even recently upgraded expectations. This reflected the strength of the company’s diversified strategy targeting both consumer and academic markets, across print & digital, globally. The Consumer division saw 12% organic growth, whilst Non-Consumer saw 3% organic growth, underpinned by the Bloomsbury Digital Resources initiative (BDR, +18% organically). The very strong performance left net cash at £51.5m at year end, and supported 9% growth in the overall dividend to 11.75p – we also expect more accretive M&A to come – we estimate every £25m deployed at 1x sales could add 6% to EPS. Flywheel keeps spinning: Near-term, management highlight that trading has started in line with expectations and that they remain confident in the scope to continue long-term success. At a granular level, the long-term potential can be seen in the recently announced new 4 book contract with Sarah J Maas, the support to demand from the forthcoming Harry Potter / Three Body Problem series on HBO / Netflix respectively and the 20% growth in customer numbers for BDR – a new target of 40% organic growth over 5 years has been set for this business specifically. Substantial valuation upside: On forecasts, we leave FY24E revenue & PBT broadly unchanged at this stage of the year - our target price rises to 575p, supported by a higher valuation for the Academic & Professional division as visibility on the significant growth opportunity increases. Bloomsbury currently trades at 7x CY24E EBITDA - well below recent industry transaction multiples and substantially undervaluing the company’s long-term prospects in our view.
Updating figures. Positive FY trading update (to Feb 2023) suggests strong business momentum continues despite no Sarah J Maas title in fiscal 2H. EPS forecasts increase c.+12% in line with new guidance. ADD - BMY continues to benefit from self-help Bloomsbury Digital expansion but also Consumer/Ch
The formula for growth: GlobalData is a leading global provider of industry intelligence and insights to corporate customers across a wide range of end market verticals, with a strong competitive advantage deriving from its ability to ingest, cleanse, analyse and deliver valuable data. The importance of subscriptions as a share of revenue (>80%) and long-term client relationships provide revenue resilience, whilst the combination of high renewal rates, price inflation, share-of-wallet gains and expansion of the client base looks set to deliver double-digit organic growth for many years to come. The ‘create once, sell many’ model using its scaleable platform also provides significant natural operational gearing to move EBITDA margins towards the 40% target. Executing on the plan: A similar growth algorithm from Gartner (targeting 12% pa growth) gives credence to the opportunity for GlobalData – we see scope for the renewal rate to move further towards the 90% target, with price rises potentially higher than the 8% of H122 – which should support forward bookings growth remaining above 10% through 2023. With a technology platform and analyst pool now in place, the direction of the monetisation opportunity can be seen in Gartner generating $250k per employee, with GlobalData at $36k. The ‘Growth Optimisation Plan’ to boost growth is well underway now. Growth potential under-valued: We forecast GlobalData generating organic revenue growth of c.10% pa – combined with margin expansion, this delivers an impressive EPS CAGR of 20% pa. GlobalData trades at c.16x CY24E EBITDA, only a modest premium to much slower-growing RELX and at a discount to US peers – with bond yields close to a peak, growth initiatives more overtly starting to bear fruit, and industry transactions for similar assets at much higher valuations, we see significant scope for re-rating over time.
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Track record of delivery: Bloomsbury’s record interim results today once again demonstrate the impressive track record of operational execution that management have built up. The company reported revenue of £122.9m, up 22% (12% organically) yoy, with PBT up 23% to £15.9m. This led to a net cash position of £41.5m at the period end (facilitating significant opportunities for further acquisitions and organic investment), and 5% growth in the interim dividend to 1.41p. Management note that they are confident in delivering expectations for the FY, and in the company’s ability to achieve continued success. A diversified portfolio: By division, Bloomsbury Digital Resources (within Academic & Professional) was the notable area of strength, with organic growth of 41% fuelled by 12% growth in customer numbers – the opportunity to expand the US footprint via the recent ABC-CLIO acquisition should not be under-estimated in our view. At a headline level, Consumer saw 19% organic growth (supported by reported growth of 30% in Children’s), with Non-Consumer organic growth of 2%. As Bloomsbury’s international diversification continues, overseas revenues now represent 73% of the group. Unique equity story under-valued: We leave forecasts unchanged at this stage. The stock has been an impressive relative performer over recent periods, but still trades at <8x CY24E EBITDA and c.15x PE (even with net cash to utilise for accretive M&A). With Bloomsbury delivering faster, and more resilient, growth over time, we continue to believe that the portfolio is under-valued, leaving plenty more to go for in terms of multiple expansion.
AGM trading update: Bloomsbury has released another impressive trading update ahead of its AGM today – strong trading across the first four months of the financial year left sales up 27% yoy, demonstrating the resilience in the business and continuing its momentum from last year. The strong performance was seen across both divisions, with Consumer growing 26% (helped by Children’s at +34%) and Non-Consumer growing 30% (with Academic & Professional +49%). Notable bestsellers included Paul Hollywood’s Bake, and both the Harry Potter / Sarah J Maas series. Outlook unchanged, for now: Management note that trading thus far has been in line with market expectations – whilst we recognise the broader macro-economic headwinds for consumers, Nielsen market data for UK book sales (with calendar H122 3% ahead of the previous record in H108) suggests that the structural increase in appetite for reading is permanent. We similarly expect the Academic & Professional division to continue benefiting from the structural uplift in potential customer numbers seen as a result of the pandemic. Plenty more to go for: We leave forecasts unchanged at this early stage of the year. Despite the impressive share price performance since pre-pandemic, the stock still trades at a modest c.7x calendar FY24E EBITDA (or 14x PE, even with net cash to deploy). With the portfolio demonstrating its increasingly resilient growth, and the Academic & Professional business still in the early stages of exploiting opportunities accelerated by the crisis, we see significant scope for re-rating over time.
Good FY22 momentum
The latest excellent chapter: Bloomsbury have today reported record FY results – revenue of £230.1m (up 15% organically), PBT of £26.7m (up 40%) and EPS of 25.94p were all ahead of recently upgraded expectations. A net cash position of £41m helped underpin a FY dividend of 10.74p. Both divisions saw a strong performance – demonstrating the strength of the company’s long-term strategy - Consumer saw 18% organic growth, with profitability in the Children’s segment a notable stand-out. Academic & Professional (A&P) grew 34%, with Bloomsbury Digital Resources significantly outperforming management’s previous targets (£18.6m of revenue versus a target of £15m). This has all been achieved despite supply chain headwinds and print cost inflation. Multiple levers for growth: On the outlook, management note good sales in Q1, with trading in-line with expectations thus far, allowing them to continue plans to invest robustly in both organic growth and future acquisitions (the virtuous flywheel we have previously highlighted). The new illustrated Harry Potter edition should support growth this year, and in A&P we believe the recent US acquisition and the 18% growth in customer numbers in FY22 should both underpin progress towards the next divisional targets. Attractions under-appreciated: We leave FY23/24E estimates broadly unchanged (PBT up c.1%), with LT EPS impacted by planned UK tax rate changes. The shares currently trade at c.8x CY23E EBITDA /16x PE – with the company delivering resilient structural growth, and operating in an industry seeing consolidation, we continue to believe this is a fundamental mispricing.
Confirming new forecasts Demand for a series of great titles, led by the new book (and strong backlist demand) from Sarah J Maas has resulted in a further positive revision to FY22E expectations. We confirm our new forecasts with PBT and EPS up 14.5% to £25.3m/23.6p. The strength of the demand seen in February has flowed into the new financial year, and we remain confident that the company should make progress year-on-year. Therefore, we also upgrade FY23E. In our view Bloomsbury is a core holding in the sector. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com 3-page note
Strong Feb trading
Another great trading result Bloomsbury has again delivered a very positive trading update, reflecting the strong front and backlist performance of Sarah J Maas titles in February. Additionally, the company has confirmed that it has mitigated print supply challenges and that BDR will have beaten its 2022 targets set in 2016. The result will be a 15% increase to our PBT expectations to £25.3m/23.6p. Bloomsbury has shown again that it is right at the top of its game. Buy, our TP increases to 425p from 400p. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com
Upgrade story continues: In its trading update today, Bloomsbury notes that revenue is expected to be comfortably ahead, and profit materially ahead, of even the recently upgraded consensus expectations post the previous trading update in late January. This again demonstrates the strength and resilience of the business, and successful execution of the company’s digital and acquisition strategies. More specifically, management note their exceptional sales in February, in part given demand for the new Sarah J Maas title in Consumer, and helped by strong backlist sales. The performance was supported by the company’s ability to successfully mitigate ongoing supply chain challenges, given earlier printing and flexibility on printing location. Entering a new era for growth: On the fast growing Academic & Professional division, management note they have beaten their 2016 target of £15m revenue / £5m profit for the Bloomsbury Digital Resources (BDR) initiative that sought to build a high-quality, high-margin revenue stream from developing digital content. Looking forward, with new targets having been put in place recently for BDR, management highlight the new era of growth ahead on the back of both organic expansion and benefits from the recent acquisition of ABC-CLIO, with its digital footprint in the US high school library market. With a forecast net cash position of >£45m at YE23E, we believe more bolt-on M&A is likely over the medium-term. A bestseller: We increase PBT by 19/12% in FY22E/23E, with our target price increasing to 430p. The shares trade at c.8x cal. FY23E EBITDA / 14x PE – we continue to believe this fundamentally undervalues the growth prospects for Bloomsbury, particularly given the resilience of the growth drivers and broader scarcity value of its assets in a consolidating industry.
Confirming new numbers Following another strong trading update we confirm our upgraded numbers, raising our FY22/23E forecasts by 12%/7.5%. We rate the share as Buy with a 400p target price. The company has cash, a library of rights and top-flight management as well as offering growth, longevity and security of revenue. Although the company is linked inextricably with the Harry Potter franchise, in our opinion the diversity it offers is its core strength. Finally, it is a rare asset whose scarcity may command a material premium in the event of industry consolidation. Malcolm.Morgan@peelhunt.com 3-page note
Upgrades once again: In a short trading update, Bloomsbury today note that revenues for FY22 are expected to be comfortably ahead of expectations, with profits materially ahead of consensus. The company note the continued strong trading in the Consumer division, across both Adult and Children’s segments – which should firmly allay any previous fears around the impact of supply chain disruption on the business. Delivering on the promise: In the Academic & Professional business, management note that in January Bloomsbury Digital Resources reached the original 2016 target of achieving revenue / PBT of £15m / £5m respectively, demonstrating the success of their efforts to build high quality, high margin digital revenues with structural growth prospects. The recently announced new target of a further 50% organic growth (and a sustained 30% margin) should be viewed with significant confidence as a result in our view, particularly given the accelerated pipeline of customers trialling the products post crisis, and the beneficial impact of the recent ABC-CLIO acquisition. Scarcity value: We increase PBT by 11%/9% in FY22E/23E respectively, driving the rise in our TP to 400p. Having pulled back with the market in recent days, the shares now trade at <8x CY23E EBITDA (or c.14x PE with net cash). We believe this is a fundamental mis-pricing for an equity with resilient growth, significant scarcity value, in an industry that continues to consolidate at notably higher valuations - we continue to see further upside to go for. Buy reiterated.
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A great story, well worth reading Bloomsbury has issued a strong trading update, noting revenue comfortably ahead and profit well ahead of market expectations. Supply chain issues saw retailer purchases materially ahead of normal. Clearly, Christmas sell-through has been good. The result is PBT for the year will be c.£22.0m vs £19.7m. Moreover, cash generation has been excellent as ever. We move to Buy with a 400p target price. This is a high-quality business that consistently delivers and has scarcity value. Buy. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com
Strong trading momentum
Adjusting for the ABC Deal Just before Christmas Bloomsbury announced the acquisition of ABC in the US for £17.3m. On the day the deal was announced our initial estimate of the impact on forecasts was a 1% increase to FY22E EPS and 5% to FY23E; we today confirm this and publish fully revised numbers. The next catalyst for share price performance should be commentary on Christmas trading. Prudent accounting for returns in the summer suggests the next update will again be positive. TP raised from 385p to 400p Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com 3-page note
Nord Stream 2 Tensions Increase: Nord Stream 2 (2nd direct Russia to Germany pipeline) was mechanically complete in September, as detailed in our recent note, but no gas will be sent though until H2/22. The German energy regulator confirmed yesterday that the full certification of the Nord Stream 2 pipeline would not occur before July 2022. Although Gazprom continues to deliver on long term gas sales commitments, additional transit capacity has not been purchased via Ukraine and more recently volumes from Yamal via Poland have also declined. We expect political tensions around the Nord Stream 2 start-up to increase as US/EU consider economic sanctions on Russia with repercussions on EU gas supply, increasing UK/EU gas price volatility. LNG follows the money: We expect incremental LNG cargoes to be attracted to the UK/EU, with prices surging c.25% higher than Asian LNG prices. The US is exporting LNG at record levels (over 11bcf/d through November). This follows the start-up of facilities at Sabine Pass facility (6th train) and Calcasieu Pass LNG export facilities. Indeed with further LNG facilities expected to start through 2022, the US will have the largest LNG export capacity globally (over 11.4bcf/d), exceeding Australia (11.4bcf/d) and Qatar (10.3bcf/d). However increasing LNG supply is unlikely to moderate prices, with global trade in LNG expected grow c.21% by 2025 (by the IEA) driven by Asian demand. Hard to Fix Storage: Continued higher gas prices will make refilling UK/EU gas storage facilities next summer challenging (EU gas storage is already at multi-year lows). High gas prices this summer (c.90p/therm) meant storage was low going into winter (LNG continued to be exported to Asia). Into summer 2022, the situation could be more acute (forward curve mid-22 is even higher c.170p/therm). UK Dependence on Gas Imports to Increase: Until the early 2000s, the UK was self-sufficient in natural gas. UK North Sea production drove a ‘dash for gas’ with low prices spurring gas fired power generation replacing coal (reducing emission). However, as UK North Sea production continues to decline, reliance on imports is expected to grow from 50% in 2021 to 60% by 2026. This could be higher if an assumed decline in gas demand (driven by domestic gas use transitioning to different technologies) happens more slowly. The majority of gas imports are delivered via a pipeline from Norway; however, LNG has contributed c.40% over the past two years, increasing the connection to the global gas market and associated pricing volatility. UK Gas Producers Offer Leverage: We continue to highlight Serica Energy (SQZ.L, Buy, 280p/share), and, once onstream early 2022, IOG (IOG.L, Buy, 50p/share). The valuations increase 32% and 40% respectively using the current forward curve (FY22 - 209p/therm and FY23 - 104p/therm).
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Expansion in Academic: Bloomsbury yesterday announced the acquisition of ABC-CLIO, an established academic publisher in the North American market. The strategic attractions are clear in our view – it strengthens the footprint in North America generally, provides access to new markets within the region, and provides more content for Bloomsbury Digital Resources to sell across its global footprint. An implied transaction multiple of c.1.6x sales, and the expectation to be earnings enhancing even this year (ending Feb), make it financially attractive too. Strategy in action: Bloomsbury has delivered impressive organic growth in recent periods, but this demonstrates that its cash generation allows accretive M&A to support growth too. Although focus may be on the integration of recent acquisitions in the short-term, we forecast net cash growing to c.£37m by YE23E so we see scope for further acquisitions in the future. More broadly, the success of Bloomsbury investment can also be seen in the number of high profile awards won by their authors recently. Significant upside to go for: We increase revenue/PBT by 1%/2% in FY22E, and 6%/5% respectively in FY23E – this moves our target price up to 380p (from 370p). The recent pull-back now leaves the shares trading at <9x calendar FY23E EBITDA – we believe this is far too cheap given the structural resilience of Bloomsbury’s growth, the scope for consensus upgrades over time, and recent valuation benchmarks in the industry.
Acquisition of ABC-CLIO Bloomsbury announces the acquisition of ABC-CLIO, a US-based academic publisher. The total consideration paid will be $22.9m, representing a sales multiple of 1.6x. On initial estimates, the transaction is accretive to FY23E EPS by c.5%. This deal expands Bloomsbury’s presence in the North American educational market place, consistent with stated strategy, and as such will be welcomed. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com
Acquisition of ABC-CLIO Bloomsbury has today announced the acquisition of ABC-CLIO, an established academic publisher of reference, curriculum & professional development materials (across online and print formats) focused on the North American market. ABC-CLIO has four imprints, 32 databases and 23k titles in its portfolio – and is a strategically very attractive acquisition in our view, given it bolsters Bloomsbury’s footprint in the region and strengthens the wider Bloomsbury Digital Resources offering (with BDR likely to sell ABC-CLIO’s digital products globally now). Cash position supports growth The consideration is £17.3m, of which £0.5m is post completion, and ABC-CLIO generated revenue of £11.5m (implying a multiple of c1.6x sales) and PBT of £0.9m in CY20 – the deal is expected to be earnings enhancing even in the current year (with £2.1m of revenue expected before the fiscal year end in February). We currently forecast a net cash position of £53m by Y/E FY23E, so see scope for more acquisitions over time as the company continues utilising strong cash generation to accelerate and strengthen future growth. Significant upside to go for The recent pull-back now leaves the shares trading at c.8x CY23E EBITDA – we believe this is far too cheap given the structural resilience of Bloomsbury’s growth, the scope for upside risk to consensus estimates over time, and recent industry transaction multiples.
Tweaking forecasts post 1H call
Record H1 results: Bloomsbury have reported very strong H1 results, with revenue up 29% to £100.7m and PBT up 225% to £12.9m. This underpinned EPS growing >200% to 12.82p. The impressive performance was seen across both divisions. Consumer saw 29% growth (24% organic) supported by a number of bestsellers including Outdoor Cooking, Piranesi and the latest Sarah J Maas title (with her titles seeing 130% growth overall). Within Consumer, Adult grew 27% with Children’s up 31%. Bloomsbury authors also won the Nobel Prize for Literature and The Women’s Prize after period end. Non-Consumer grew 27%, with Bloomsbury Digital Resources (BDR) accelerating to 44% growth as academic institutions shift to digital products. Well positioned for the future: The net cash position of £43.7m underpinned a 5% increase in the dividend to 1.34p and should support significant M&A opportunities in future. Importantly, management successfully mitigated print supply chain issues in H1, by earlier printing and agility in printing location, but the company note that retailers and online booksellers have significantly increased their stock levels to ensure inventory in place for Christmas, and this earlier ordering boosted H1 revenues. Whilst mindful of the wider external environment (including potential supply chain impediments and possible higher stock returns), the H1 strength means management are confident in Bloomsbury achieving FY expectations. Longer-term, management have set new targets for BDR – now expecting 50% organic growth and a 30% margin over the forthcoming five years. Equity mis-priced: We leave forecasts unchanged at this stage, albeit we continue to see upside risk to forecasts over the longer-term. Despite the strong run over the past year, in CY23E Bloomsbury trades at just c.1.2x sales and c.9x EBITDA – we continue to see significant further upside to go for.
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Very strong 1H
Well managed 1H saw retailers drag forward demand, resulting in a very strong performance. This and active management (a £10m rise in investment in inventory) is for the moment protecting the company from the worst impacts of the supply chain pressures. Confidence in the full-year numbers is pleasing. Yet again Bloomsbury’s diversity and management style is protecting investors. A growth company to own in difficult times and after. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com
Strong trading update accompanying AGM Preliminary results were published on 2 June. Today’s update accompanies the AGM and confirms that the robust trading has continued into the first four months of the year. Although we leave forecasts unchanged, this strong momentum hints at upgrades later in the year. The shares have performed well and we retain our Add rating with an unchanged 385p target price. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com
Robust AGM trading statement: Bloomsbury have released a robust trading statement today, delivering a strong performance with sales up 28% for the first four months, continuing the momentum seen last year. The impressive growth is being seen across the group, with Consumer up 26% and Non-Consumer up 31%, helped by 41% growth in Bloomsbury Digital Resources. Management also note that their UK Consumer print book sales outperformed the market during this period. Acquisition benefits: Management separately highlight that their two recent acquisitions have contributed a strong sales performance in June and that the company is actively targeting further acquisition opportunities - we forecast net cash of £43m at YE22E despite recent acquisitions and the announced special dividend. On the outlook, management expect the FY22 performance to be in-line with current market expectations, whilst noting that the summer weather is helping drive the success of 2 UK frontlist titles – ‘Outdoor Cooking’ by Tom Kerridge and ‘Psycho by the Sea’ by Lynne Truss. Still more to go for: We leave forecasts unchanged at this stage. Despite the strong run, the shares still trade at just c.16.5x CY23E earnings, regardless of the net cash position - we continue to believe this does not reflect the fundamental value of the group and its growth opportunity over the longer-term, fuelled by the virtuous circle created by previous investment in high quality content.
Updating forecasts post strong FY21 figures
Success through diversity We update our forecasts following the preliminary results and Head of Zeus acquisition. We upgrade FY22E PBT by c.9% as indicated on the day. We review our valuation basis and raise our target price from 325p to 385p. In this note we detail the changes and summarise the features that should make Bloomsbury attractive for investors. We retain our Add recommendation. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com 6-page note
Upgrades and special dividend Bloomsbury is diverse (subject, format, territory, sales channel) and robust (financially, IP, reputation). As a result it has weathered the Covid crisis well, and investors are seeing upgrades to expectations and a special dividend returning the cash raised in April last year. Bloomsbury is a valuable asset, but not an expensive one, in our view. We look to 2022 for robust trading and more M&A. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com
2021 well ahead; strong momentum into FY 2022
Another upgrade: Bloomsbury FY results once again beat expectations, despite two recent upgrades – revenue grew 14% to £185.1m, 4% ahead of our forecast, with PBT growing 22% to £19.2m (also 4% ahead). Strong cash conversion led to net cash of £54.5m at YE21, and this underpinned both 10% growth in the final dividend and the announcement of a 9.78p special dividend (representing £8m). Despite this and the recent acquisition, we still forecast a net cash position of >£50m at YE22E, and we expect management to actively target further deals. Content is key: By division, Consumer was the stand-out, growing 22% with a strong performance across Adult (17%) and Children’s (26%) – amongst many titles, demand for Sarah J Maas (+129% yoy) and Harry Potter (+7%) were notable areas of strength. Non-Consumer grew 1%, supported by 3% growth in the Academic & Professional business – 49% growth in Bloomsbury Digital Resources more than offset print weakness, and demonstrates the structural acceleration in university demand the crisis has caused (with 73% growth in the number of institutional customers). On the outlook, management note strong trading has continued into FY22, and with robust ongoing momentum, highlight that they expect revenue to be ‘ahead’ and profits ‘comfortably ahead’ of consensus this year. Fundamental value remains: We upgrade FY22E revenues by c.6%, with PBT up 12% and EPS up 10%. With the stock trading at below 14x CY23E earnings despite the net cash position, and at just 7x EV/EBITDA, we believe the valuation does not capture the fundamental resilience and scale of the growth trajectory, or the scope for earnings accretive M&A.
It’s a small world – Red Globe Press Bloomsbury has acquired Red Globe Press from Springer Nature Group. The price is attractive, and for a small deal the accretion is noticeable. The deal is consistent with the stated group strategy, so a welcome move strategically. We update our forecasts, upgrading FY23E by 5%. A transaction of this scale if welcome, raises the question of what to do with the surplus cash. A special distribution of half the forecast cash balance suggests a 36p special dividend could comfortably be funded. We leave our 325p target price and Add recommendation unchanged ahead of the prelims in June. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com 3-page note
Solid C-19 performance vs 'recovery'
Expanding academic publishing footprint: Bloomsbury on Friday announced the acquisition of academic publisher Red Globe Press (RGP), from Macmillan Education for a total consideration of £3.7m. RGP is focused on publishing in the Humanities & Social Sciences, with a backlist of >7k titles and publishing >100 new titles pa – importantly, it adds three digital products to Bloomsbury’s Digital Resources platform. RGP is expected to contribute revenue / PBT of £6.0m / £0.4m respectively to fiscal FY22, but we expect a return to normalised levels of revenue / profits for RGP in FY23 onwards. RGP generated revenue of £9.6m and PBT of £1.1m in calendar 2020. Attractive opportunities: The Academic & Professional division now represents 32% of FY23E revenue, and this could increase further over time given the scope for more similar M&A, given we still assume a net cash position of c.£58m at YE22E. Not every acquisition may occur at quite such attractive multiples, but it is a reminder of the financial, as well as strategic, benefits Bloomsbury can target via M&A. From an underlying standpoint, recent commentary from peers like Informa highlights the underlying resilience of the academic publishing market, but the crisis has also accelerated structural shifts that should benefit Bloomsbury’s revenue growth over time – management have previously noted that c.1400k institutions trialled their Digital Resources product suite in H121, relative to c.500 in the whole of FY20. Upgrade momentum: We increase earnings by 2-4% in the medium-term, and this drives our target price increase to 340p. Despite the share price move on Friday, Bloomsbury still trades at <14x cal FY23E PE – in our view, this does not capture either the opportunity to deploy cash or the fundamental resilience and scale of its growth opportunities over time.
Looking to the future, not the past: Centaur is now an international provider of valuable business information, intelligence, data and services into just two sectors – the marketing industry (via its Xeim division, c.80% of revenues) and the legal industry (via its ‘The Lawyer’ division, c.20% of revenues) – relative to seven different sectors just four years ago. Centaur enables its professional customers to achieve better corporate outcomes, and then can benefit from the value created. The ‘build once, sell many’ nature of its business models should also generate strong operating leverage and cash generation. Mapping out the road to 2023: On the back of this transformation, management have set out their ‘MAP23’ program, targeting FY23 revenue of over £45m and EBITDA margins of 23%. As a starting point, the impact of 2019 cost savings measures de-risks this target. The key ‘Flagship 4’ brands (Mini MBA, Econsultancy, Influencer Intelligence & The Lawyer) should drive the majority of the expected revenue growth, helped by recent investment in marketing and product development. Both divisions are targeting a growing share of their client budgets, but, shorter-term, green shoots of an improving cyclical backdrop in marketing / legal services are also being seen. A new pricing initiative provides both support & upside risk to existing forecasts. The path to £100m: With a clear strategy and a structurally robust product offering in place, focus should shift to the appropriate valuation for the growth potential (we forecast 12-13% organic growth over FY21-23E, allowing the MAP23 targets to be reached). Centaur trades at a CY23E EV/EBITDA of just 5x, whilst offering a c.10% FCF yield / 3%+ dividend yield. Meeting the MAP23 targets would ensure the growth potential its transformation has unlocked is better appreciated by investors, and a valuation in-line with larger peers could bring the market cap past the £100m barrier (c.£60m today).
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Preferred Names: Through 2021, our preferred names in the sector are Energean (value trading at 0.65x RENAV, dividend policy announcement and progress towards Karish first gas Q1/22) and Diversified Gas & Oil (c.10% forecast dividend yield, potential for deal flow). For direct oil price leverage, we prefer either Tullow Oil (best FTSE 250 performer, refinancing to conclude Q2/21) or Harbour Energy (scale, oil price exposure with strong balance sheet). All of these stocks have high-quality management teams, with most focused on shareholder returns and maintaining (or re-establishing in the case of Tullow) balance sheet strength. Greater Weighting: The E&P sector is at its highest weighting for over five years, as detailed in our recent note. This follows an overall recovery in share prices combined with the introduction of Harbour Energy. Together, the group accounts for 0.5% of the FTSE All Share, and 2% of the FTSE 250 (assuming the inclusion of Harbour Energy in September). Catalysts – Delivery, Refinancing and Deal Flow: A number of names in our coverage are focused on project delivery through 2021, with first gas expected from The Core Project (Independent Oil & Gas), Columbus (Serica Energy) and, through the midstream ANOH project, onshore Nigeria (Seplat). Refinancing/bondholder discussions continue with Tullow Oil and Hurricane Energy. Cairn Energy should complete the sale of its UK producing assets and the purchase of a new portfolio onshore Egypt (H2 2021). Increasing Oil Price Deck to $60/bbl: We have increased our oil price deck to $60/bbl for Brent (up from $55/bbl), maintaining 45p/therm ($6/mcf) for UK Gas Prices and FX at 1.35 GBP/USD. We expect the recovery in demand to continue through 2021 to pre-COVID levels as the vaccine roll-out continues, particularly in the key US market. The IEA recently increased its FY21 demand numbers, with a H2/21 weighting given the potential for near-term setbacks as parts of Europe have re-imposed restrictions. Near-term, monthly OPEC+ meetings should provide flexibility around the pace of easing 2mb/d supply cuts through May to July. However, with the glut in inventories built up through 2020 returning to their 5-year average, and restrictions in upstream capex, we remain constructive on the outlook for the oil price medium term. Target Price Changes: Increasing our oil price assumptions and updating numbers has led to an average c.15% increase in our target prices. Key changes include Harbour Energy (upgrade to Buy, TP increased to 24p/share), Tullow Oil (TP raised to 70p/share), Pharos (upgrade to Hold, TP to 26p) and Lundin (TP rises to SEK305).
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Acquisition of Red Global Press assets Bloomsbury announced the acquisition of certain assets of Red Global Press (RGP), from Macmillan Education. RGP specialises in publishing for higher education in humanities and social sciences, business and management, and study skills. The consideration paid is £3.7m, representing a sales multiple of 0.4x. On our initial estimates, the deal adds c.3%/5% to FY22/23E. The acquisition strengthens Bloomsbury’s existing academic publishing and expands into new academic areas. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com
Confirming revised numbers We confirm our revised numbers. We increase FY21E PBT from £14.7m to £18.1m and EPS from 13.9p to 17.1p, a 23% increase. Bloomsbury is a rare asset in an industry that is consolidating. The company is very well capitalised, with a major IP asset whose value is not directly measured on the balance sheet. Returns on these assets are improving. But a bidder might consider there is a material opportunity to accelerate those returns. More immediately the successful investment of the cash mountain could transform the P&L. We raise our target price from 290p to 325p and retain our Add recommendation. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com 5-page note
Strong end to the year drives further upgrades Bloomsbury clearly had a very strong final month as lockdown continues to stimulate reading. Revenue upgrades of 5% and EBIT upgrade of c.25% are the result. Cash of £54m at the year end represents c.25% of the market cap. We leave the outer years unchanged for now. How demand patterns evolve as we emerge out of lockdown is for the moment uncertain. What doesn’t change as we exit Covid-19 is the importance of unique IP and a clear diversified strategy. We maintain our Add recommendation and 290p TP. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com
Further positive trading update
Unmerited share price fall prompts upgrade to Add The shares have fallen in recent weeks from a high of 306p as the company passed its year end and in advance of the prelims in May. We think this fall is unmerited given the strong series of Covid updates, and perhaps reflects the inevitable hiatus in news flow. We recommend investors use this current share price weakness to add to positions. Hence we move from Hold to Add. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com
Amberen – a high growth brand, suited to Alliance Pharma’s niche. APH recently acquired privately-held Biogix Inc for $110m (15.5x FY20 EBITDA), thereby gaining access to Amberen, a leading brand in the US Over-The-Counter menopause symptom relief supplement category. Amberen becomes APH’s 3rd Star brand, with management flagging that it could become the group’s 2nd largest product. We see it materially increasing group exposure to the US market, whist bolstering the high margin, high growth Consumer Healthcare portfolio, which on FY21E now represents c.73% of group revenue. Our updated forecasts show teens percentage EBITDA accretion from inclusion of an asset that is set to grow at a double-digit percentage. We leave the revenue synergy potential as upside. Business model working particularly well. The recent FY20 trading statement showed particular strength from Kelo-cote, the consumer portfolio performing well against a difficult market backdrop and the start of a recovery from Prescription Medicines. Pleasingly, cash generation remains strong. With a forecast FY22E FCF yield of 7.9%, we see leverage being paid down rapidly and the potential for further deal-making into the future. Our deal accretion scenario analysis within suggests 20% FY23 EPS accretion to be possible, whilst still leaving material headroom on banking covenants. Valuation update. We reiterate our Buy recommendation, with a DCF-based price target of 110p that now includes Amberen. We see the enlarged Consumer Healthcare portfolio representing c.80% of our target price, with the stock (in our view) currently trading materially below fair value. Even at our new 110p target price (up from 94p), APH would trade on an FY21E PE of c.20x for a 14% FY20-22E EPS CAGR, representing a PEG ratio of c.1.5x. Buy.
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Confirming upgrades
Trading update – profit well ahead The company expects revenue for the full year to be ahead and profit to be well ahead of market expectations. The performance was driven by strong trading in the Consumer division. Academic & Professional is making good progress, in line with its strategic objectives. We look to increase our EPS for FY21 by 17% to c13.6p. In addition, the company announced that John Warren, Senior Independent Director and Chair of the Audit Committee, will be stepping down from the board post at the AGM. Full-year results will be announced in June. Malcolm.Morgan@peelhunt.com, Jessica.Pok@peelhunt.com
Continues to outperform: Bloomsbury has today released an unscheduled trading update for the fiscal year ending 28 February, noting that revenue will be ahead of expectations, with profit well ahead of consensus for the year. Management note that this reflects strong trading in the Consumer division, across both Adult & Children. Alongside a supportive backdrop (Nielsen estimates UK print book sales at +5.2% in 2020), they highlight the notable performance of bestsellers in H2 such as ‘Eat Better Forever’ and ‘Joe Biden – American Dreamer’, but also the strong backlist sales of Harry Potter, Sarah J Maas’ titles and ‘Why I’m No Longer Talking to White People About Race’. Encouragement for the future: This performance – once again confounding earlier fears around the impact of the crisis – in our view illustrates the strength of the strategy to continue investing in high-quality content, given consumer demand for this remains extremely resilient. From a broader perspective, we believe this applies to the Academic & Professional division too – management note that it continues to make good progress, and we believe incremental customer demand for its digital resources through the crisis will prove beneficial over the longer-term. Fundamental valuation upside: We upgrade FY21E revenues by c.4%, with EPS up 19% – estimates from FY22E onwards see more modest changes at this stage, although we note that with our new forecast for a net cash position of c.£50m at YE21E, significant scope for earnings accretive M&A remains. Despite the net cash, the stock trades at just 14x calendarised FY22E earnings, or <8x EBITDA, notably below the level of recent industry transactions – we see significant upside to the valuation over time.
Record results in unprecedented times: Bloomsbury has reported very strong interim results – revenues grew 10% to £78.3m, with PBT reaching £4.0m, ahead of the Board’s expectations and a record since H108. The performance in fundamental terms reflects the strength in demand for its titles, alongside a surge in demand for digital products. By division, Consumer (+17%) underpinned the group’s growth in the period to a significant extent, with both Adult and Children’s seeing similar growth rates (and it is notable that Harry Potter UK print sales grew 8% yoy from mid-July to end-Sept). Balance sheet strength comes to the fore: Diversifying the portfolio has been a key plank of the strategy in recent periods, helping improve the quality and resilience of growth. The success of this can be seen in Bloomsbury Digital Resources growing 47% in H1 (with a near 3x increase in customer numbers), leaving the Academic & Professional business up 1% (and Non Consumer close to flat). Balance sheet strength is a key part of facilitating this – a net cash position of £44.1m is better than expected and should allow both ongoing content investment to drive future growth and an active consideration of M&A opportunities. A dividend of 1.28p has also been announced. The value of resilient growth: Management note that the company continues to trade well in the first 6 weeks of H2. In light of the ongoing impressive performance, we upgrade FY21E revenues & EPS 11%/36% respectively, with FY22E estimates flat / up 7%. On our new estimates the shares currently trade at <11x CY22E earnings – we believe they are fundamentally mis-priced given the ongoing trajectory of resilient organic growth and the scope for accretive M&A as balance sheet headroom is deployed. The ability of Bloomsbury to navigate volatile macro-economic conditions deserves greater recognition in our view.
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FY20 results robust: Bloomsbury has reported FY20 revenue of £162.8m, PBT of £15.7m (up 9%) and EPS of 16.8p, all broadly in-line with expectations despite the impact of Covid-19 on the Chinese market in Jan/Feb. By division, Non Consumer grew 4%, driven by 4% growth in Academic & Professional (A&P), whilst Consumer saw just a 3% decline against tough comparables (and fewer Sarah J Maas titles), helped by the strong H2 frontlist, which helped drive 12% growth in Adult Trade. The A&P success story is particularly encouraging with Bloomsbury Digital Resources up 32%, helping the group’s continuing strategy to diversify – profit growth in this division was 58%. Harry Potter sales were in-line with FY19 & audiobook sales were up 190%. Signs for encouragement: The year-end net cash position (£31.3m), recent placing proceeds & cash conservation measures ensure investment can continue whilst print distribution is disrupted. We previously assumed 80% of print revenues were lost for 6 months but group revenue is down just 3% YTD to the end of April with print revenues running at 87% of last year, signs of certain markets starting to re-open and academic digital revenues up 52%. This should give confidence in the track record of dividend payments being maintained – the company propose a bonus issue equivalent to a final dividend of 6.89p per share. Focus on long-term value: No guidance is provided at this point, but management note a downside scenario now of print revenues down 60-65% for 3 months – implementing this, our FY20E revenue / PBT increase by 14%/104%, with FY21E PBT trimmed 7%. The shares trade at c.15x CY21E earnings – we see scope for Bloomsbury to emerge from the crisis in a relatively stronger position, with optionality from deploying placing proceeds.
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Ofwat’s CEO wrote to all water company CEOs yesterday setting out expectations for the industry response to Covid-19, and we highlight three sentences from the letter. “I would also like to see all companies consider whether they can go further to ease the financial burden on households, including by considering opportunities to increase financial assistance and by adopting suitably supportive and flexible payment and debt collections practices.” “We will consider the need for any ex post adjustments to our regulatory system following an in-the-round assessment as part of our normal reconciliation process.” “A reasonable and pragmatic approach to the collection of wholesale charges from retailers who may be facing difficulties in obtaining payment from their customers.” The message on prioritising the delivery of core services in these unprecedented times was echoed by Ofgem’s CEO who made it clear a pragmatic approach to regulatory compliance will be taken; “Where companies can demonstrate that any compliance issues have resulted from prioritising efforts to protect customers and security of supply, we will take full account of this in any decisions we take.” Ofgem’s message followed on from an agreement between BEIS and the domestic energy suppliers to provide a broader range of payment options for prepayment customers, a suspension of credit meter disconnections, putting in place support measures for the vulnerable, as well as for any energy customer in financial distress. The suppliers and network companies occupy a unique place in the economy, and are arguably public/private crossovers. There is no doubt that collectively they will step up and deliver. In practical terms, we would not be surprised to see a tick up in bad debt levels, with the pressure being felt more acutely by thinly capitalised new entrants. We expect more market exits through both Ofgem’s SoLR process and trade sales. Switching levels could fall, as consumers stick with what they know, and suppliers use staff to focus on priority customers. This may well see less pricing pressure for the likes of Centrica who have been competing to retain customers. Activities that require human proximity such as smart meter installations will be impacted. Installation rates could fall, albeit with lower risk of regulatory issues. For those seeking safe havens, network utilities (NG.L, PNN.L, SVT.L, UU.L) should be best placed given volume true-ups.
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Zed Books acquisition: Bloomsbury has today announced the acquisition of Zed Books, a UK academic and non-fiction publisher, for £1.75m (with £0.9m upfront and the rest in the next 12 months). It joins the Academic & Professional division and is expected to contribute £0.8m of revenue in its first year, whilst also breaking even (before reorganisation and acquisition costs) in that year. It is expected to be earnings enhancing after that. Building scale: The acquisition builds scale in the division’s offerings in African Studies and Development Studies, making Bloomsbury the market leader in academic ‘Area Studies’ publishing now. It also expands their Politics and International Relations offering. This follows the similar acquisitions of Oberon books and IB Tauris in recent times, and is a natural strategic fit given Bloomsbury’s scope to sell the content digitally into a wider customer base. We leave our forecasts unchanged at this stage. Signs for reassurance: The ability to make bolt-on acquisitions is one benefit of Bloomsbury’s net cash position, which they reported yesterday to be c.£31m at year-end. This also provides a significant degree of reassurance in terms of disruption to demand – whilst the impact of coronavirus on book store sales at this point remains unclear, at the very least Audio Book and eBook sales should provide a meaningful offset. The stock trades at c.12x FY21E earnings.
FY trading in-line with expectations: In their trading update, management note that the performance for the full year is in-line with their expectations. Continuing the theme from H1, the Non-Consumer Academic & Professional division delivered a strong performance (with revenue and margin growth), underpinned by expanding demand for their Bloomsbury Digital Resources (now taken by more than 1100 institutions). The Consumer division had an H2 weighted frontlist this year, and saw a number of bestsellers including from JK Rowling, Tom Kerridge and Sarah J Maas. Cash remains key: Encouragingly in these times, management highlight their net cash position of £31m at year-end (even with the recent acquisition of Oberon Books in December). We believe this highlights the value of management’s recent focus on working capital improvements. Uncertainty, but signs for reassurance: The company is less than a month into a new financial year and so highlights that it is too early to comment specifically on the impact of coronavirus on a financial year ending at the end of February 2021. It notes the potential disruption to bookshops, online book retailers and academic institutions, but recognises the scope for book reading to be popular at home, and importantly highlights that the availability of eBooks and Audio Books provides a means for their content to continue to be acquired. We leave our forecasts unchanged at this stage – the stock trades at 10.5x calendar FY20E earnings.
Called Markets for a reason: The Markets division is likely to have grown at nearly 4.5% in 2019 despite a c.1% drag from the UBM Fashion portfolio and the impact of disruption in Hong Kong – the easing of both headwinds should allow divisional growth to accelerate this year. More fundamentally though, we believe the structural upgrade of the typical exhibition business model is yet to be appreciated. As the MarkitMakr initiative (launching online marketplaces for industry buyers/sellers that attend the exhibition) rolls out more widely, there should be a meaningful improvement in the resilience of the division (and incremental revenue opportunities). Cash generation provides optionality: Natural operating leverage starts to kick in with higher growth – as well as allowing organic investment to support growth, it should provide optionality on cash returns accelerating. With the dividend pay-out below 45% in 2018, growth should remain ahead of earnings in FY19/20, and with leverage reaching c.2x by year-end 2020E, we think next year could see the company consider implementing a regular buyback programme (every £100m, or 1% of market cap, adds only 0.1x). More to go for: We trim underlying growth modestly in FY19E to reflect the impact of Hong Kong disruption on the Markets business, and update for recent disposals and sterling strength – this causes earnings to fall c.4% from FY20E onwards (and our price target to fall to 925p). Informa now trades at 16.4x FY20E earnings with a 3% dividend yield, still a meaningful discount to slower-growing RELX at c.21x PE. Although RELX’s valuation is historically justifiable, with Informa structurally boosting growth and looking to incremental cash returns, we see scope for the gap to narrow – it remains a key large cap pick in the Media sector.
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Considering the value at Risk: The Risk division is the key driver of growth for RELX and the biggest contributor to the group valuation, so the share price will be sensitive to any potential slowdown in growth. The Insurance segment in the US is the core part of the business, and we believe this could slow notably as the dramatic fall in auto insurance premium inflation during 2019 could lead to a slowdown (or decline) in insurance quote volumes. If Insurance were to move to 1%, this would put the division to 5% pa growth, and raise questions about the maturity and structural growth profile of the business - applying a 15x FY20E EBITA multiple (currently 18x) would remove c.150p from our valuation. STM - awaiting executive orders: In the Scientific, Technical and Medical division, the Open Access debate could be back with a vengeance in 2020, should reports of a potential Trump administration executive order to make all federally funded US research free to read immediately prove true. Although RELX is willing to sign these hybrid Open Access type deals, it could cause disruption near-term; having another 8% of global research not behind a paywall could cause price deflation in future subscription renewals with other customers. Separately, peer review costs and sterling strength could impact margins long-term, moderating group profit growth. Pricing perfection: Lower underlying assumptions plus the impact of sterling strength, a smaller buyback assumption and a recent acquisition mean our EPS falls c.3% in FY20/21E. RELX now trades at 21x FY20E PE, offering a 2.5% dividend yield - with forecast earnings growth of c5%, the balance of PE to Total Return is the highest of its peer group. This is leaves the risk-reward skewed to the downside in our view – take some profits here.
Acquisition of Oberon: Management has previously highlighted its appetite to increase acquisition activity as one part of the strategy to create a ‘Bigger Bloomsbury’, and today’s announcement provides evidence of this coming to pass. Bloomsbury is to acquire drama publisher Oberon for £1.2m, to bolster its already strong footprint in this subject with leading content in the contemporary drama field. The deal is expected to break even in its first year, and be earnings accretive after that given synergies coming through. Oberon generated revenue of £1m in calendar 2018. Academic & Professional expansion continues: The Academic & Professional division has been growing in importance in recent periods given its strong organic growth trajectory, but the focus on acquisitions here will help the group continue to diversify away from its historic origins in Consumer. We believe this acquisition – albeit small – is a perfect demonstration of management’s strategy, with an attractive purchase multiple yet significant opportunities to cross-sell the content across its wider customer base. High-quality profit growth: Although more acquisitions may not be imminent, we would expect more deals over time as Bloomsbury seeks to capture the optionality from its net cash position. More broadly, whether through acquisitions or the recent joint venture in China, we believe the company continues to deliver on its strategy to build a resilient, structurally growing, cash generative profit stream. This warrants a higher multiple, in our view.
Joint venture with key Chinese publishers: Bloomsbury has today announced it is entering the domestic Chinese market through the signing of a joint venture with China Youth Publishing Group (CYP, one of the four original state-owned publishers) and Roaring Lion Media, a business founded by CYP in 2007 to focus on international publishing, particularly in the Arts and Sciences. Bloomsbury has a 50% stake in the joint venture, and builds on its existing presence in the country, which is currently its biggest licensing market. Bigger Bloomsbury in action: This is a key example of management’s ongoing strategy to build a bigger and more profitable Bloomsbury. Bloomsbury will be one of only a very few Western publishers operating in the domestic Chinese market and clearly – given the size and growth of the economy – the market is likely to be a significant opportunity for Bloomsbury over the medium to longer-term. The company highlighted that initial investment in the joint venture will be de minimis, and even if this expands modestly over time to help capture the revenue opportunity, we would expect this to be a gradual and controlled process. Valuation upside potential remains: Nearer-term, other parts of the Bigger Bloomsbury will likely have a more noticeable financial impact – the rapid expansion of Bloomsbury Digital Resources is helping the Academic & Professional division support group growth, audiobooks provide incremental demand for its content and the net cash position on the balance sheet should provide meaningful optionality from M&A. At c.15x calendar FY20E earnings, we see ongoing scope for re-rating.
Encouraging signs: Bloomsbury reported revenues of £71.3m, down 5% yoy, with PBT of £2.5m also modestly down yoy. This however masks the robust true underlying performance – Children’s Trade fell 19%, but this reflects 1 less Sarah J Maas release versus H119 and Harry Potter revenues down 13% in the period. Elsewhere, Adult Trade grew 2% and Non-Consumer grew 6%, driven by 9% growth in Academic & Professional – largely on the back of an impressive 73% growth in revenues from Bloomsbury Digital Resources (moving this initiative into profit for the first time). Outlook reassuring: Management highlighted that the Consumer front-list is even more skewed to H2 than normal – with the new illustrated edition of Harry Potter already on sale and the new Tom Kerridge title coming in December (amongst others). This gives them confidence that FY performance for the group will be in-line with expectations – despite the impact of US tariffs on books printed in China coming into place (which may have a greater impact in FY21). Reflecting their confidence, the dividend grew another 6%, helped by the cash position improving with further inventory reductions (down 5% organically). Valuation upside potential remains: Management’s strategy to build a bigger and more profitable Bloomsbury should continue to deliver resilient earnings growth through the cycle, underpinned by the number of growth opportunities they can target and the potential benefits from M&A as they utilise their net cash position. We expect them to deliver a 13% EPS CAGR, which warrants a higher multiple than the current 14x calendar FY20E PE. Our EPS forecasts see negligible change near-term and nudge up c.1% longer-term.
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Trading update: Non-Consumer has maintained its growth trend through the start of FY20, led by a continued strong performance from A&P (which in FY19 grew sales +13%). Group revenues for the four months ended 30 June are, however, a modest -3% lower YoY given the strong comparator in Consumer, where the Adult division benefitted from unexpectedly high sales of backlist Kitchen Confidential in the prior year (Adult revenues were +23% in H1 FY19), as well as timing of Sarah J Maas titles given A Court of Frost and Starlight released in the first 4 months last year and this year’s release back-end weighted. Upbeat outlook: BMY is performing in line with management expectations for FY20, with Q1 typically the smallest contributor to the full-year. In Consumer, significant frontlist titles are H2-weighted, including a new illustrated Harry Potter title due out in October, and the new Sarah J Maas. We also have encouraging news today that Tom Kerridge’s new book, Lose Weight and Get Fit, will be accompanied by a primetime BBC TV series – which helps underpin expectations for what should be a major BMY title. In Non-Consumer, we expect positive momentum to continue through the remainder of FY20; and we note the new BDR partnership with the National Theatre announced in June which further supplements/strengthens Drama Online and helps endorse BMY digital credentials. Our forecasts are unchanged at this stage, for FY20E revenue +3.6% to £169m, adj.PBT £16m and EPS +11% to 12.5p. Still undervalued: BMY trades on <13x CY20E P/E despite offering c.13% forecast EPS CAGR, with a strong balance sheet pointing to additional M&A optionality.
We report on the performance of our momentum style screen since the last refresh three months ago and present the 25 new constituents. The screen underperformed small-cap and microcap indices modestly, though our previous focus stocks did significantly better. While momentum (as we express it) has outperformed smallcap significantly since inception of the screen in July 2016, this has arisen in shorter periods and appears to only coincide with a steadily rising small-cap index. We therefore consider this style screen to have limited predictive capability. We highlight seven stocks, which we think are interesting.
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All Hallows’ Eve could well herald both trick and treat. We have the likelihood of an increase in interest rates for the first time in more than a decade, a scary thought for some. In the last few weeks, we have also seen two sides to the market, with both a significant increase in secondary fund raisings across a range of sectors, as well as the market’s unforgiving nature to any downbeat news. Most indices have retained their progress year to date in the last fortnight. In Share News & Views, we comment on recent updates from Bloomsbury, Braemar Shipping* and Vitesse Media*.
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It seems like an eternity has passed since J.K. Rowling published the seventh and final book in the Harry Potter series, nevertheless that hasn't stopped Bloomsbury Publishing reissuing the novels with new covers and in illustrated versions. But has that done the trick? Well the jury is out and Bloomsbury has seen a 13% increase in interim revenues to £52.7m for six months ended 31 August 2015, albeit not all the revenue is from the Harry Potter franchise. New York Times and USA Today bestselling author Sarah J. Maas, Khaled Hosseini and celebrity chef Hugh Fearnley-Whittingstall are just some of the other names on the publishing list who have enjoyed success.
Motif Bio plc (MTFB.L) – BUY*: QIDP granted for skin infections | Bloomsbury Publishing (BMY.L): Q1 update
