Bloomsbury Publishing (LSE:BMY) is a relatively recent addition to the FTSE 250. But the stock fell almost 20% after the firm’s full-year results before going on to finish the week 20% down.
While the last year was a difficult one for the company in terms of its financial performance, I think there are a number of reasons to be positive. And investors might not have to wait around too long.
Weak results
In the 12 months leading up to the end of February 2025, Bloomsbury’s revenues climbed 5%. By itself, that’s not a bad result, but there were some concerning signs beneath the surface.
While total revenues in the company’s academic publishing division were up, this was largely due to the acquisition of Rowman & Littlefield. Organic sales, by contrast, fell 10%.
Bloomsbury attributed this to the increasing shift from print publications to digital ones. Academic happens to be my industry and from what I can see, that trend is very unlikely to reverse in the future.
Another source of concern was a 22% decline in pre-tax profits. The firm put this down to higher costs of sales, administration, and distribution.
With inflation in the UK starting to pick up, investors should keep an eye on the potential threat to the company’s margins. This is also something to take seriously.
Bloomsbury’s results are underwhelming. But I think the market might be overreacting to the latest news and missing some important positives in both the long term and the short term.
Positive catalysts
Over the long term, one of the major reasons for optimism is Bloomsbury’s intellectual property and agreements with its authors. Its most obvious asset is the Harry Potter series.
This is something I underestimated when I first looked at the stock. With the last novel released in 2007, it’s easy to think the ongoing appeal of the franchise is limited, but I think this is a mistake.
While people aren’t queueing outside bookshops for the latest releases, there’s a steady series of companion books that are proving popular. And new releases are on the way later this year.
The biggest positive, though, is Sarah J. Maas. There wasn’t a release from Bloomsbury’s best-selling author in the last year, but the next book in the A Crown of Thorns and Roses series is on the way.
I think this is a reason to be extremely positive about the next year for the FTSE 250 company. And with a total of six books currently under contract, this has a longer-term significance as well.
In other words, while the most recent year has been relatively quiet, the pipeline looks strong. So with the stock falling sharply, I think this is one to consider buying.
Ups and downs
Bloomsbury isn’t exactly a cyclical business. But with no Sarah J. Maas publication in the last 12 months, I think there’s reason to believe the last year has been unusually bad.
I expect this to change in the relatively near future. And with a strong catalogue, I see the falling share price as a potential buying opportunity investors should consider seriously.
