Companies: CCT    GCAP    RET   

Running the rule over the media sector following a bevy of trading updates, Paul Bates has taken a shine to client Character Group, arguing that shares in the toys and games designer have ‘substantial upside potential’. The release of a new range of Doctor Who action figures next spring gives him increasing confidence in the 2008 forecasts – £104.2 million revenues and profits of £12 million – while the company says that results for the year to August 2007 ‘will at least meet’ Charles Stanley’s £97 million sales and £11 million pre-tax estimates. ‘Character has an impressive product portfolio that has been well received by retailers and we expect to see that provide good news flow over the coming months,’ writes Bates, labelling the shares a buy.

An update from GCap Media brought with it a target to hitch operating margins ‘to within’ 12 to 14 per cent by March 2009. Bates, attaching an add recommendation to the shares, believes there is ‘scope for higher revenues and higher margins than this’, with the commercial radio counter’s recovery potential at last ‘showing through’.

Another house stock, in-store digital marketer Retec Digital, reported progress on a number of fronts and expressed confidence in hitting forecasts. Conceding that a lot hinges on the development of a contract with Sainsbury’s for 2008 and that ‘it is likely that there will be some movement in our estimates’, Bates reckons the shares, trading on around 5.2 times next year’s earnings, are worth buying. ‘We also expect, in the medium term,’ he says, ‘the business will expand through new client wins and the expansion of contracts within the existing client base.’