Harry Potter publisher Bloomsbury Publishing (LON:BMY) surprised the market on 22 May when it issued full-year results accompanied by a somewhat cautious outlook statement.

Investors who’ve grown used to more upbeat guidance from CEO Nigel Newton threw their toys out of the pram, triggering a 20% one-day fall in the stock:

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City analysts have since translated Bloomsbury’s new guidance into a much more modest 6.5% downgrade to full-year expectations.

For shareholders and would-be buyers, the question now is whether the mis-match between the cut to forecasts and the much larger share price drop spells opportunity – or if it’s a sign that a more prolonged slowdown in growth could lie ahead.

In this Stock Pitch I’ve taken an in-depth look at this interesting business and considered the factors that could affect growth over the next couple of years.

Summary

Pros:

  • Impressive 30-year track record of growth

  • Harry Potter publisher – remains one of the biggest sellers in fiction

  • Founder-CEO with clear vision and deep expertise

Cons:

  • Reliance on a small number of hit authors

  • Non-consumer business seems to be struggling to generate organic growth and may be relying too heavily on acquisitions

  • Recent profit downgrade mark the start of a longer period of weakness

Profile

About the stock

Bloomsbury Publishing is an independent publishing house with a range of consumer and non-consumer titles. It’s best known as the publisher of the Harry Potter series and more recently, the romantasy novels of Sarah J Maas.

The company is listed in the Media & Publishing industry group, within the Consumer Cyclicals sector.

Bloomsbury is a member of the FTSE 250 index, with a market cap of £423m and a recent share price of 521p.

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The StockRanks reflect the recent earnings downgrade, with strong quality metrics but weaker scores elsewhere, giving a neutral overall profile:

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About the opportunity

Bloomsbury’s growth may be suffering from a temporary slowdown – it’s too soon to be sure. But this company is still led by its founder Nigel Newton and has an impressive long-term growth record.

This is perhaps most easily represented by…

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