Research that is free to access for all investors. Companies commission these providers to write research about them.
Brokers who write research on their corporate clients and make it available through our main bundle offering.
Research that is paid for directly by asset managers. Only accessible to institutional investors permissioned for access.
Event in Progress:
View the latest research on other companies in the sector.
We lower our TP from 2,700p to 2,400p, largely to reflect FX and the disposal. There is optionality around the multiple as progress continues.
Oxford Instruments plc
Oxford Instruments^ (OXIG, Buy at 1,774p) - Recovering margin
Key highlights: Record revenue of £500m, 70bps margin improvement on OCC to 17.7%, strong visibility for the year ahead Numbers: Revenue £500m +6.5% CCY (a beat to both INVe £487.1m and Cons £496.7m), adj. EBIT £82.2m +10.8% CER (INVe £79.9m; Cons £81.3m) which implies a margin of 16.4% on a reported basis and 17.7% on OCC compared to 17.1% in FY24, adjusted PBT of £83.4m (INVe £81.1m; Cons £82.4m), adjusted EPS 112.4p (INVe 104p; Cons 106.2p), Dividend 22.2p +6.7% yoy (INVe 21.3p; Cons 21.7p), Net cash £84.4m (Cons £87.7m). Trading summary: A strong performance considering the macro backdrop, with revenue improved 6.5% CCY to £500m (first time >£500m), which includes growth in semicon offsetting continued weakness in healthcare and lifesciences. Momentum continues to build as the order book provides decent visibility for FY26: 5 months cover for Imaging & Analysis and 9 months cover for Advanced Technologies. The underlying book-to-bill remains in positive territory at 1.02x (FY2024: 1.03x). Net cash: £84.4m of net cash (FY24: £83.8) following £15.4m of acquisitions. Spend and cash conversion improved considerably, to 89% from 64% in the prior year. Margins: Adjusted EBIT improved 10.8% OCC to £82.2m, supported by operational efficiencies and simplified group structure. Margins reached 17.7% on OCC and 16.4% on reported basis, reflecting margin progression across both divisions and progressing towards the group's medium target of >20%. Divisionally, Imaging & Analysis reached a 24.7% margin on OCC basis (+60bps yoy), reflecting a strong start to strategic initiatives. Advanced technology reported a margin of 4.5% which implies a 360bps improvement yoy and a strong performance following the implementation of the fix and improve strategy. Outlook: Whilst acknowledging the level of macro uncertainty, management highlight a strong and more focused business with a lot in their control, and well placed to mitigate any direct impact from tariffs. There are further benefits to be realised from strategic initiatives, and revenue visibility is healthy. The balance sheet, and proceeds to come from the sale of the quantum business, allows the share buyback. Overall, they are confident that their differentiated, higher-margin business will continue to deliver attractive profitable growth. We expect consensus will adjust for the sale of Oxford Instruments NanoScience, which will provide a margin uplift of >150bps on a reported basis, but no other changes are expected. Valuation: Shares trade on 16.5x FY26E P/E and 9.5x EV/EBITDA falling to 15.2x and 8.3x respectively in FY27E
Oxford Instruments is in a binding agreement to sell its quantum business Oxford Instruments NanoScience to Quantum Design, a US-based provider of products and services for scientific, academic and industrial research, for £60m (c.1.0x Sales) cash consideration including up to £3m of deferred consideration contingent on future revenue from quantum scaling systems In FY25 the quantum business generated £59m of sales and £1m of adj, operating profit, returning to both growth and profitability following a £5m loss in the prior year. The sale is set to be immediately earnings enhancing and beneficial to margins which are set to improve by 100bps, in line with the strategy outlined in FY24 results. The divestment streamlines Oxford's operations and enhance group growth and margin metrics. Although back in profitable territory, the quantum business required further R&D investment, and the timing and potential of commercial scalability remains uncertain. The deal is set to complete in Q3 of FY26. Given the strength of the balance sheet (consensus models net cash of £87.7m), the Board has decided to return £50m to shareholders via a share buyback which will commence before the deal completes and is expected to take 9-months. Delay to preliminary results: FY25 results which were due to be announced this morning have been delayed at the request of the auditor, BDO. This is a localised issue and management do not expect any change to adjusted numbers or cash. Valuation: On our existing forecasts, Oxford Instruments (March y/e) trades on 16.8x FY26E P/E and 9.6x EV/EBITDA, falling to 15.5x and 8.5x respectively in FY27E. This compares to its peer Spectris that has received an offer from Advent (see here) with an implied FY25E valuation (Dec y/e) of 23.8x P/E and 14.8x EV/EBITDA (FY26E 20.1x P/E, 12.6x EV/EBITDA which reflects some market recovery assumed in our forecasts).
Oxford Instruments plc Spectris plc
Oxford has delivered a strong FY25 performance in line with expectations, driven by strong order momentum and the benefits of executing its strategy which enhanced its cost focus, operational excellence and improved commercial excellence. FY revenue growth is expected to be 9% on CCY basis (+6% yoy) driven by strong growth in H2 and supported by FY order book growth of 3% on a CCY basis. The group’s pivot away from China, which was set to be a £20m impact to revenue, was offset by strong growth and demand in the US and South East Asia. Divisionally, the Imaging & Analysis division (c67% of group revenue; 90% of operating profit) performed well, maintaining strong margins (>24% CCY basis) and supported by strong growth in semiconductors which helped to offset prevailing softness in the healthcare and life science end markets. The Advanced Technology division delivered strong CCY revenue growth and returned to profitability following the delivery of large quantum orders. We note this is a material uplift in this division’s performance and significant progress towards the group’s target of achieving 10-12% adjusted operating profit margin (divisionally) in the medium-term. Adjusted operating profit is expected to grow 13% yoy on CCY basis, in line with expectations, with margins rising 70bps yoy to c17.8% versus the H1’25 margin of 15% - noting a significant performance and contribution in H2. The group continue to monitor the tariff situation, but expects its well diversified portfolio and global presence will help to offset some of the impacts. We note that a majority of its product sold to the US is manufactured in the UK and a majority of its competitors’ manufacturing facilities also lie outside the US, meaning with a 10% UK tariff, it appears well positioned. FY25E INVe: Revenue £487.1m, Adjusted Operating Profit £79.9m, Adjusted PBT £81.1m, Adjusted EPS 104.0p. On our forecasts, the shares trade on 15.6x FY25E P/E, 9.1x EV/EBITDA and FCF yield of 4.8%. We will review our TP and recommendation in light of recent market movements.
Oxford Instruments^ (OXIG, Buy at 2,040p) - CFO to step down
Our 2,700p TP models mid-case earnings, and is c.30% above today’s price. The current 18-19x PE is cheap vs history and underlines the scope of the opportunity. We reiterate our Buy recommendation.
Results were in line with expectations with no change to full year guidance on a CCY basis. Order intake was robust during the period providing decent visibility, although the timing of recovery in healthcare remains uncertain. Current trading The group reported revenue of £225.8m, an increase of 10.4% on CCY basis driven by regional rebalancing, and strong growth in semiconductor (+26.9%) and material analysis (+9.6%) which helped to offset weaker healthcare & lifesciences demand. The CCY order intake improved 2.6% yoy to £224.6m against a tough comparator of +10% in the prior year. The order book now stands at £294.9m and implies a positive book-to-bill of 1.01x. As noted in the recent trading update, the impact of FX headwinds and the mix effect of strong growth in advanced technologies had an adverse impact on adjusted operating profit and margin which declined 7.7% yoy to £32.9m implying a margin of 15% (-240bps yoy). Although H1 is typically lower, cash conversion continues to be impacted by working capital movements and the timing of cash receipts from a long-term quantum contract. A better H2 cash performance is expected, and likely to be within the range of 40-60%. The balance sheet remains in decent net cash position with £39.3m, and the group is increasing the interim dividend by 4.1% yoy to 5.1p. Outlook A decent orderbook and visibility sees reaffirmed full year guidance (on a CCY basis). The rebalancing of the group portfolio has resulted in exceptional growth in the US and Asia-ex China, and operational improvements have unlocked further opportunities for value creation. In line with historic trends, a H2 weighted performance is expected, and supported by the large order book of £294.9m, particularly in Advanced Technologies and continued delivery of cost, efficiency and operational improvements Valuation Shares trade on 17.8x FY26E P/E and 10.2x EV/EBITDA, falling to 16.7x P/E and 9.2 EV/EBITDA in FY27E.
Oxford Instruments^ (OXIG, Buy at 2,130p) - HY25A, FY25F unchanged
Key highlights The group expects to deliver c10% CCY revenue growth, aided by c3% growth in order intake. Adjusted operating profit will be slightly ahead of H1 2025, but margins will be lower on account of mix and stronger revenues from the Advanced Technologies division. Divisionally, Imaging & Analysis had good momentum in H1 and positive book-to-bill, most notably in materials analysis and semiconductor markets, which helped to more than offset softer demand in Healthcare and life sciences market. Advanced Technologies reported good order book visibility. The compound semiconductor business continues to perform well, and the quantum business continues to make good progress towards returning to profitability with ongoing deliveries to a key customer. Regionally, the US performed well despite some customer caution in light of the upcoming election and China was down yoy, as expected, as the group exits the quantum and high end semiconductor market; however, the pivot towards south east Asia has helped to offset some of the weakness in China. Outlook: Encouragingly, management expect to deliver FY24/25 in line with current market expectations on a CCY basis. A H2-weighted (revenue split 45%/55%) performance, in line with historic trends, is expected and will be supported by large order deliveries in Advanced Technologies and continued delivery of cost, efficiency and operational improvements. We note that prevailing FX headwinds are expected to further impact operating profit by £1.5m-£2.0m. Valuation: CY25E P/E 17.0x, EV/EBITDA 9.7x and FCF yield 4.5%, improving to 16.0x, 8.8x and 5.0% respectively in CY26E
Oxford Instruments^ (OXIG, Buy at 1,938p) - FY25F cc in line, FX impact
Oxford Instruments^ (OXIG, Buy at 2,495p) - Site visit to£75m semiconductor facility
Oxford Instruments has released in-line FY24 results. Key highlights include good organic growth and momentum, a new strategy, a CHF17m acquisition, and a positive outlook. Results summary Revenue increased by 5.8% y-o-y (9.8% at cc) to £470.4m, driven by growth in all geographies and key end markets, including advanced materials, life science and semiconductors. The operating margin contracted 100bps to 17.1% resulting in adjusted operating profit declining 0.2% (+3.7% at cc) to £80.3m (consensus £78.1m / INVe £77.3m). EPS was 3.3% lower y-o-y at 109.0p, but the dividend is increased by 6.7% to 20.8p. Cash conversion of 64% reflected capacity expansion and inventory build-up ahead of the transfer of operations to the new facility. FY net cash was £83.8m (H1’24 £79.1m). Outlook The FY24 order book was £302m (FY23 £320m) with a positive book to bill of 1.05x. Therefore, the Group enters FY25 with a strong order book and a robust growth pipeline while cost actions should support good constant currency growth. New strategy Oxford Instruments has also communicated its new strategy with the Group being reorganized into two distinct divisions, Imaging and Analysis and Advanced Technologies, to simplify and enhance operations. Additionally, it has established its medium- term targets as follows: organic growth of 5-8%, operating margin of 20%+, cash conversion >85%, R&D 8-9% or revenue, strong ROCE, and selective acquisitions.
Oxford Instruments^ (OXIG, Buy at 2,460p) - FY24A - FY25F unchanged, strategy update & acquisition
Oxford Instruments plc SDX Energy PLC
Encouragingly, Oxford expects to deliver results in line with expectations (and marginally ahead of our own), despite incurring significant losses at the quantum business as a result of ceasing commercial activities in China. Overall momentum across the rest of the Group looks to have been maintain
Oxford Instruments^ (OXIG, Buy at 2,090p) - FY24F in line with expectations
Oxford Instruments has released a positive H2 trading update. Key highlights include positive organic growth and momentum, margins to be c.100bps lower y-o-y (this is slightly ahead of consensus), and FY24 profit to be in-line with expectations. Trading summary H2 trading was as anticipated with FY24 revenues expected to be 6% higher y-o-y (+9% at cc) reflecting positive momentum and driven by growth in all geographies and key end markets, including advanced materials, life science and semiconductors. Orders were lower y-o-y against tough comparators and a slowdown in life science OEM orders, however the book-to-bill remains positive. Outlook FY24 operating profit is anticipated to be in-line with expectations (INVe £77.3m – FactSet consensus £77.2m) with FY24 margins set to be c.100bps lower y-o-y (consensus -130bps) due to China losses and operational investment. The group enters FY25 with a strong order book and a robust growth pipeline while cost actions should support profits. Next catalysts – FY24 results are scheduled on 11 June 2024 and a site visit on 10 July 2024 to its new operational etch and deposition systems facility in Bristol, focusing on the product and services provided within the compound semiconductor industry.
Oxford Instruments^ (OXIG, Buy at 2,275p) - Small acquisition in France
Oxford Instruments^ (OXIG, Buy at 2,055p) - Higher quality but on lower multiples?
This is a solid print for OXIG against a backdrop of investment in the business and tough trading. With strengthened market positions, improvement in business infrastructure and a growing cash pile, we look forward to seeing more progress under new CEO, Richard Tyson.
Initial Equity Trading Comments - 14 November 2023
OXIG CBOX SXS TXP LAND INSE ERGO RNWH EYE INF
Oxford Instruments has released positive H1 results. Key highlights include good growth, order book strength and unchanged FY24 guidance. H1 results summary Group revenue increased by 4.6% (7.5% at cc) due to good growth in Research & Discovery, and the order book grew by 10% at cc to £332m following a positive book to bill of 1.07x. Adjusted operating profit grew by 6.5% at cc to £36.5m and generated a constant currency adjusted operating profit margin of 18.2%, which was broadly in line with last year. Normalised cash conversion was 41%, compared to 65% last year, reflecting an adjustment for capital expenditure on capacity expansion and inventory build-up ahead of the transfer of operations to the new facility. Cash conversion is expected to return to historic rates in H2. Net cash was £79.1m compared to £97.1m last year and £100.2m at FY23. EPS was 2.8% lower y-o-y and the Group declared an interim dividend of 4.9p, which is a 6.5% increase y-o-y. Outlook FY24 guidance remains unchanged. The group enters H2 with a strong order book and a robust pipeline but remains mindful of the current macroeconomic environment. However, the current operational improvement programme is expected to support an increase in production and an improvement in H2 trading, as the business is usually second half weighted.
Oxford Instruments^ (OXIG, Buy at 1,924p) - HY24A –FY24F unchanged
Interims in line and broadly flat YoY with full year guidance unchanged from last month's trading update. Trading has remained robust, evidenced by the closing order book of £332m (+10% YoY cc. and vs £320m at yr end), which provides strong cover for H2. The shares trade on a CY24E EV/ EBITA of 12.
Estimate changes: Oxford Instruments (OXIG.L, Price 1912p - Hold - TP: 2150p)
Oxford's update indicates that H1 performance has been slightly below expectations, with profitability impacted by some pockets of demand weakness, mix, FX and further investment for growth. We expect H1 EBITA of c. £36m vs £36.8m in H1 23. While H2 is expected to see an improvement, backed by a st
Management is guiding to FY24E EBITA towards the lower end of the range, but this is primarily FX-related. Aside from that, the business looks to be performing well, providing a solid platform for new CEO Richard Tyson to build on. With our FY25E numbers unchanged, we maintain our Buy recommendation and 2,670p target price.
Oxford Instruments^ (OXIG, Buy at 2,045p) - TU – FY24F towards lower end
Oxford Instruments^ (OXIG, Buy at 2,700p) - Investments underpin growth opportunity
Final results and outlook in line with recently upgraded estimates. Order book +19.2% cc at £319.6m (H1 £315.7m; 3yr order CAGR 15%) underpins expectations for further progress in the year ahead, despite the uncertain economic outlook. Today's update is further evidence of Oxford's alignment to a n
This is a strong set of numbers in a year beset by inflationary pressure, supply chain disruption, and export licence refusals to China. The highlights read well, the outlook is positive and we reiterate our Buy recommendation.
Oxford Instruments^ (OXIG, Buy at 2,730p) - Strong FY23A; FY24F unchanged.
Oxford Instruments^ (OXIG) - Buy at 2,675p - Upgrades! Further margin upside?
The year has ended well, and Ian Barkshire can step down on a decent upgrade. The outlook remains robust, supported by structural growth drivers around environmental, health and connectivity, and with only a small question mark around UK export licences to China this year we remain positive on the story. We raise our TP from 2,400p to 2,670p and reiterate our Buy recommendation.
Overall trading in H2 has continued to be very strong and much better than we previously expected, despite continued supply chain challenges (although these began to ease in H2) and stiffening UK Government export licence controls to China. With further strong order growth, including from compound
Initial Equity Trading Comments - 13 April 2023
OXIG SBRY NXR BRK SAVE TSCO NRR DTTYF
Oxford Instruments^ (OXIG, Buy at 2,445p) - FY23F ahead of expectations.
Upgrade confirmation – following the interims on 8 November we are updating our model and confirming the upgrades flagged on the day. The strategy continues to deliver better quality growth in structural growth end markets, and with scope for further margin progression and the potential for M&A (with net cash of almost £100m), we expect OXIG to be able to outperform the wider industrials peer group over at least the medium term. Buy rating maintained.
The strategy continues to deliver better quality revenue growth, margin progression, and with almost £100m cash the balance sheet we expect to see more acquisitions to come. We reiterate our Buy rating. The shares trade on 22x March 2023E before any upgrades.
Interim results marginally ahead and outlook statement in line. Therefore, we make only minor adjustments to our estimates for FX, interest and tax (net impact -2% full year EBITA, +1% EPS). Although we remain mindful regarding the weakening macroeconomic environment, the near-term outlook is under
Oxford's statement indicates that constant currency expectations for the full year remain unchanged, order intake remains strong and ahead of sales and with a robust pipeline across all its end markets. We expect the H1 order book to be c.10% ahead YoY on an OCC basis. In addition, with the signifi
Oxford Instruments has released an in-line half year update which highlights slightly slower progress than expected, but has all the ingredients for a strong H2 – namely pricing materialisation, order book delivery and FX. FY expectations are unchanged. Current trading Oxford has seen continued strong demand in the first half of its financial year and management expects “strong” revenue and adjusted operating profit growth, with organic growth slowing due to global supply change challenges, price increase timing and order book phasing. However, reported growth is supported by FX tailwinds. The balance sheet remains strong with net cash increasing £8m from the year end to £94m (ex-IFRS 16). Order book and outlook It continues to see good y-o-y order growth, with organic orders running ahead of revenues. Management comments that the pipeline remains robust across its end markets and that it anticipates higher H2 production combined with the positive impact of price increases. This visibility drives an unchanged FY outlook. Investment case We view Oxford Instruments as a pioneering company with scope to improve the structure of the group through portfolio and operational adjustments. Select M&A enhances the ‘tidy up’ strategy of the business model, and it is encouraging to see margin enhancement continuing. Oxford Instruments is an attractive asset – on 25 Feb 2022 a proposal for a possible offer from Spectris was confirmed. The suggested price was £31/share (compared to the closing price then at £20.20) and the Board had indicated that it was minded to recommend. This valued Oxford Instruments at CY23E PE of 34.4x, EV/EBITDA of 20.9x and an EV of c.£1.71bn. The approach was subsequently withdrawn on 7 March following Russia’s invasion of Ukraine.
Oxford's results continued the strong progress management has made in recent years (5yr operating margin +540bps to 18.1%; EPS +14% CAGR, b/s transformed), through refinement of the portfolio, realignment around the end customer and more commercially-focused development. We believe there is further
Solid finals and a decent order book Oxford Instruments’ results came in slightly ahead of expectations and continued to show impressive top-line growth and margin progression. The outlook is confident, supported by high levels of activity in its key end markets and reflected in the order book, which is up 27% at organic constant currency. With £85m of net cash on the balance sheet, there is plenty of scope for the organic growth to be complemented by more M&A, or other earnings-accretive capital allocation. Either way, we see more to come and reiterate our Buy recommendation and 2,650p target price. Henry.Carver@peelhunt.com, Harry.Philips@peelhunt.com
FY22 results summary & highlights Revenues grew by 15.3% (+14.5% at constant currency) to £367.3m aided by strong growth in semiconductor, advanced materials, quantum technology and despite supply chain disruption constraining growth across the Group. The adjusted operating margin expanded 30bps – absorbing cost inflation – to 18.1%, increasing operating profit by 16.9% (+15.2% at constant currency) to £66.3m (INVe £63.2m / consensus £65.5m). EPS increased 20.0% to 94.3p (INVe 83.6p / consensus 85.9p) and the dividend by 6.5% to 18.1p (INVe 18.25p / consensus 18.43p). Cash generation reflected growth and order phasing with 84% conversion and Oxford maintains a strong balance sheet with net cash of £85.9m (INVe £76.3m / consensus £48.3m). Order book and outlook Orders were up 19.6% to £423.1m (+24.0% at constant currency) and the order book stands at a record level of £260.2m (+26.6% at constant currency), driven by strong growth across its end markets. A strengthened order book provides good visibility and, despite management expecting continued economic headwinds and supply chain constraints, the FY23 outlook is in-line with expectations. Investment case & valuation We view Oxford Instruments as a pioneering company with scope to improve the structure of the group through portfolio and operational adjustments. Select M&A enhances the ‘tidy up’ strategy of the business model, and it is encouraging to see margin enhancement continuing. Oxford Instruments is an attractive asset – on 25 Feb 2022 a proposal for a possible offer from Spectris was confirmed. The suggested price was £31/share (compared to the closing price then at £20.20) and the Board indicated it was minded to recommend. This valued Oxford Instruments at CY23E PE of 34.4x, EV/EBITDA of 20.9x and an EV of c.£1.71bn. The approach was subsequently withdrawn on 7 March following Russia’s invasion of Ukraine. The shares are trading on a FY23E PE of 24.8x and EV/EBITDA of 14.7x, falling to 23.2x and 13.8x respectively in FY24E.
Oxford's post-close update is positive, with trading "marginally ahead" of expectations despite acknowledgement of the continuing challenges of supply chain disruption and cost inflation. We interpret this to mean c. £2m (c. 3%) ahead at the EBITA level for FY22E. With expected achievement of our p
Key trading highlights Oxford Instruments has released a brief year-end (March) trading update, highlighting that FY22 revenues and adjusted operating profit are to be marginally ahead of management expectations (revenue, INVe £343m – consensus £350m / adjusted operating profit, INVe £63.2m – consensus £62.1m). This strong performance is despite supply chain disruption and cost inflation, and reflects a strong H2 with continued resilience in its end markets. Positive outlook Strong order growth supports a healthy order book moving into FY23 and management expects further margin improvement underpinned by its Horizon strategy which is driving growth, operational efficiencies and an improved service offering. Investment case & valuation We view Oxford Instruments as a pioneering company with scope to improve the structure of the group through portfolio and operational adjustments. Select M&A enhances the ‘tidy up’ strategy of the business model, and it is encouraging to see margin enhancement continuing. Oxford Instruments is an attractive asset – on 25 Feb 2022 a proposal for a possible offer from Spectris was confirmed. The suggested price was £31/share (compared to the closing price then at £20.20) and the Board indicated it was minded to recommend. This valued Oxford Instruments at CY22E PE 36.3x, CY23E PE 34.4x, CY22E EV/EBITDA 22.0x, CY23E EV/EBITDA 20.9x and an EV of c£1.71bn at the time. The approach was subsequently withdrawn on 7 March following Russia’s invasion of Ukraine. On our forecasts, the shares currently trade on a FY22E PE of 24.8x, FY23E PE of 24.2x, FY22E EV/EBITDA of 15.0x, FY23E EV/EBITDA of 14.3x. Next catalyst: FY22 results due on 14 June 2022
FY22 pre-close update; trading ahead A short pre-close update confirmed trading slightly ahead of expectations and further margin progression in spite of the well flagged headwinds we are seeing across the sector. We are upgrading our FY22E adj PBT by 6%, FY23E by 7% and increasing our target price from 2,500p to 2,650p. The company is continuing to break new ground thanks to its “Horizon” continuous improvement programme and we see more to come. We reiterate our Buy recommendation. Henry.Carver@peelhunt.com, Harry.Philips@peelhunt.com, Afonso.Osorio@peelhunt.com
Oxford announced on Monday, later confirmed by Spectris, that it had received a non-binding indicative cash and share proposal from Spectris regarding a possible offer for the Group at 3,100p per share (1,950p in cash + 1,150p in new Spectris shares), valuing Oxford at an EV of £1.7bn. The share pr
We believe that Oxford's key enabling technologies, combined with further self-help through Project Horizon and a net cash balance sheet that provides options, offer potential for sustained, above sector average earnings growth over the next few years. With the shares trading at a reasonable discou
We expect Oxford to benefit from continued strong momentum through its record order book, favourable long-term end market dynamics and its own self-improvement programme. We are encouraged that management sees further medium-term margin upside from 18.0% achieved in H1 (noting many peers achieve &g
Key result highlights include: a strong financial performance, strong demand in its core markets and geographies, and unchanged expectations despite prolonged order conversion, supply chain and cost headwinds. First half results Revenues grew by 21.2% (+26.8% at constant currency) to £170.1m. The adjusted operating margin expanded 70bps to 18.0%, increasing operating profit by 25.9% (+28.0% at cc) to £30.6m. EPS increased 25.6% to 41.2p. An interim dividend of 4.4p is a 7.3% increase compared to last year. Cash conversion of 48% reflects an increase in inventories to support order intake and mitigate supply chain disruption, timing of shipments and a resumption in capex. The balance sheet remains strong with net cash of £70.1m. Outlook Orders grew 18.3% at cc and the order book was 13.3% higher y-o-y providing good visibility for the year ahead. Management expects supply chain pressures to moderate conversion of orders to revenue and drive cost inflation in the second half, but given the strong opportunity pipeline and order book, their expectations of further progress in the year are unchanged. Management suggests that the consensus FY22E adjusted operating profit is £62.9m (INVe £63.2m). Note: on 21 September the trading update suggested a FY22 outcome ahead of the then top of the range £63.0m. Investment case We view Oxford Instruments as a pioneering company with scope to improve the structure of the group through portfolio and operational adjustments. Select M&A enhances the ‘tidy up’ strategy of the business model and it is encouraging to see margin enhancement continuing. We admire the business model and its prospects, but believe this is reflected within its current valuation multiples. We remain at Hold. The shares trade on a FY22E PE of 28.7x and EV/EBITDA of 17.5x, falling to 28.0x and 16.6x respectively in FY23E.
Oxford’s brief update indicates that trading is slightly ahead of current market expectations (consensus EBITA £61.2m; range £59.7m-63.0m) and therefore we increase our bottom-of the range EBITA of £59.7m by 5% to £62.6m. Strong current trading momentum means we expect good progress in H1 and we es
Oxford Instruments has released a brief but positive trading update ahead of its AGM today, highlighting strong trading with the full year to be slightly ahead of expectations. Current trading – Strong across the Group Order and revenue growth has been strong in the first five months of the year (March year-end), supported by positive underlying demand across its markets, and across both commercial and academic customers. As expected, FX has adversely impacted revenues and operating profit and at current rates provides a FY22 headwind of 4% and 3% respectively (INVe 5% and 4%). Outlook – positive and ahead of expectations A healthy pipeline across its end markets, a strong order book and acquisition contribution give management confidence that the full year will be ‘slightly ahead of expectations’ (company compiled FY22 adjusted operating profit forecast range of £59.7-63.0m – an average of £61.2m – INVe £60.8m), despite ongoing uncertainties including supply chain disruptions. Investment case – expanding margins and strong balance sheet We view Oxford Instruments as a pioneering company with scope to improve the structure of the group through portfolio and operational adjustments. Select M&A enhances the ‘tidy up’ strategy of the business model and it is encouraging to see margin enhancement continuing. We admire the business model and its prospects, but believe this is reflected within its current valuation multiples. We remain at Hold. On our current forecasts, the shares trade on a FY22E PE of 29.2x and EV/EBITDA of 17.4x, falling to 28.5x and 16.6x respectively in FY23E. Upcoming catalyst Management is hosting an analyst day tomorrow, 22 September, to review its quantum technology facilities in Abingdon and its half-year results are due on 9 November.
The scientific instruments specialist announced on 16 June 2021 a modestly sized acquisition. The Group is purchasing WITec GmbH for cash consideration of €42m (c£36m), this includes a €5m performance related element over the 12 months following completion. Based in Ulm, Germany, WITec is a specialist in Raman microscopy imaging solutions. The transaction is subject to regulatory approval from the Federal Ministry for Economic Affairs and Energy, completion is thus expected in the period up to end September this year. Following the acquisition and assuming a lower effective tax charge, we upgrade or FY22F adj. dil EPS by 4.5% from 81.9p to 85.6p. We also note the potential FX headwind particularly in FY23F therefore only expect adj. EBITA to improve marginally year-on-year with growth thereafter (i.e. in FY24F onwards). Oxford currently trades on a FY22F PER multiple of 26.6x, EV/EBITDA ratio of 17.0x and a dividend yield of 0.8%. The valuation continues to be supported by cash flows and the earnings growth potential coming from secular organic growth in instrumentation, through acquisition potential and through further leveraging business performance driving the EBIT margin higher (the Horizon strategy). We retain a BUY stance with a fair value of 2,635p (c16% upside).
A good fit Oxford has announced the acquisition of German-based WITec GmbH, a leading provider of Raman microscopy imaging solutions for €42m. The deal looks a good fit, and is earnings accretive in year 1. We see more to come and reiterate our Buy recommendation and 2,500p target price. Henry.Carver@peelhunt.com, Harry.Philips@peelhunt.com, Jolyon.Wellington@peelhunt.com, Afonso.Osorio@peelhunt.com
New numbers post prelims; another margin beat After the prelims yesterday we are putting through a 4% upgrade to FY22E EPS and introducing FY24 forecasts. The results were positive, with project Horizon still showing that it is delivering improvements in customer intimacy and operational performance that is resulting in better margins. With a favourable backdrop in structural growth markets we see more to come and reiterate our Buy recommendation. Henry.Carver@peelhunt.com, Harry.Philips@peelhunt.com, Jolyon.Wellington@peelhunt.com, Afonso.Osorio@peelhunt.com
Oxford Instruments (‘Oxford’), the scientific instruments and services specialist, servicing academic and industrial laboratories and processes globally, confirmed a strong operating performance for the year to end 31st March 2021 on 8th June 2021 despite the challenging market conditions. The FY results published showed targeting much improved performance metrics, driving sustainable long-term growth and improved margins. Overall revenue, adj. EBITA and adj. PBT were in line with our March 2021 revised expectations with adj dil EPS c3% ahead of our forecast due to a lower effective tax charge. Despite the adverse currency impact going into FY2022F and the ongoing COVID-19 uncertainties with regards to economic recovery, Oxford remains well positioned in our view. Following the challenges with regards to onFY2022F to be realised. As a result, we upgrade our adj. EBITA and adj. PBT by 3.5% to £62.1m and £61.2m respectively and adj. dil EPS (assuming a 22% effective tax rate) by 3.4% to 81.9p. Oxford trades on an FY2022F PER of 25.6x, EV/EBITDA of 15.4x and a dividend yield of 0.8%. As we move forward our valuation model one year ahead, we increase our fair value by c10% from 2,400p to 2,635p which implies an upside of c26%. We retain our Buy recommendation.
Meeting Notes - Apr 01 2021
OXIG MAB1 BAKK QLT HSV
Oxford’s update on Friday reflected the strong recovery many of Oxford’s end markets have enjoyed since the nadir of the COVID-19 pandemic last year as well as further operational benefits from Project Horizon. Unsurprisingly, management highlighted semiconductor applications and China as particula
Oxford Instruments (‘Oxford’), the scientific instrument specialist, has today issued a short but very positive trading update (26 March 2021) in relation to its March year-end. Overall, the Group has made good progress in H2 FY2021 and maintained its good order growth (especially across Asia given performance from China has been strong). Oxford’s end markets have remained resilient with the strongest growth across its semi-conductor applications. As a result, the Board now expect FY2021F revenue to be marginally ahead year-on-year (post a small FX impact) and adj. operating profit to be between £55m to £57m with the latter being supported by realised operating efficiencies (i.e. cost saving measures). Therefore, we upgrade our revenue by 7% from £296.1m to £318m and adj. EBITA by 15% from £49.6m to £57m, which implies an operating margin of 17.9% (compared to our previous expectations of 16.8%). This equates to an adj. dil EPS upgrade of 16% from 65.7p to 76.1p (assuming an effective tax rate of 21%). We would also expect a flow-through into FY2022F (i.e. a c7% adj. EBITA upgrade to £59.7m) given the strong operating performance. We continue to see a positive outlook for further sustained margin improvement, with good forecast upgrade potential given the long-term prospects in instrumentation, with global expertise in critical areas of technology. We retain a BUY stance with a fair value of 2,400p (c34% upside) based on growing FY2020A adj. dil EPS (69.4p) by 10-12% for five years, sustaining a 30x PER and discounting back to present value at 10%.
Positive surprise; TP up to 2,500p Oxford Instruments has issued a short, unscheduled announcement guiding to a FY21 operating profit range some 17% ahead of PHe and even further ahead of consensus. This is thanks to an impressive top line performance but the real beat is at the operating margin, with the implication being that it is running some 150bp ahead of our assumptions. Clear signs of the fundamental improvements coming through from Project Horizon. With a 17% upgrade to PHe FY21 EPS and 18% upgrade to FY22 we increase our TP to 2,500p and reiterate our Buy recommendation. Henry.Carver@peelhunt.com, Harry.Philips@peelhunt.com, Jolyon.Wellington@peelhunt.com, Afonso.Osorio@peelhunt.com
We see further positive momentum in the Oxford story. A combination of significant indicators within the interim results, further self-help through Project Horizon, strong balance sheet to be utilised and attractive market backdrop, keeps us interested. We believe our estimates are conservative, wi
The specialist scientific instruments manufacturer published a robust set of half-year results for the six months to 30 September 2020. Despite the negative impact of COVID19 on its customers, the interims were ahead of market expectations. The results showcased the resilience of the business with the Horizon cost efficiency strategy delivering stable operating margins despite the decline in revenues. The Board expects the FY2021F performance to be “a little behind last year on a constant currency basis” but ahead of current market expectations. We upgrade our FY2021F adj. PBT by c23% to £48.5m and adj. dil EPS by c26% to 66.5p. Based on our upgraded forecasts, Oxford trades on an FY2021F PER of 31.7x (falling to 28.5x in FY2022F), an EV/EBITDA of 18.8x (falling to 16.5x) offering a dividend yield of 0.7%. We continue to see further sustained margin improvement, with solid long-term prospects in instrumentation and global expertise in critical areas of technology, driving forecast upgrade potential. We retain a BUY recommendation with a fair value of 2,400p (c15% upside).
FY20 results highlight progress, profits ahead of expectations Oxford posted strong full-year results highlighting good progress despite the impact of Covid-19 in the latter part of its financial year to March. Revenues grew by 1.1% (-0.7% at constant currency) to £317.4m. The adjusted operating margin expanded 70bps to 15.9% (15.1% at constant currency), increasing operating profit by 5.9% (-1.0% at constant currency) to £50.5m (INVe £47.5m – guided range £47-50m given on 18th March). EPS increased 12.7% to 70.2p. The final dividend is under review, as expected, following the suspended interim dividend. Cash generation was strong and Oxford maintains a strong balance sheet with net cash of £67.5m, driven by cash conversion of 124% and disposal proceeds. Outlook clouded by Covid-19, but many future positives Orders were up 0.3% to £336.0m (-1.3% at constant currency and a book-to-bill of 1.06x) and the order book stands at £175.0m (+12.1% at constant currency), driven by finished goods not shipped or installed by the year-end. Covid-19 related disruptions have impacted the start of its financial year with cumulative orders 3% below a weak comparator period (growth in Asia of 19% offset a reduction in Europe and North America of 23% and 7% respectively). A strong uplift in orders for compound semiconductor process solutions has offset a reduction in orders for higher-margin academic related products. Group revenue is 3% above last year, assisted by delivery of shipments held over from the year-end. We believe Oxford is positioned well with end market resilience and the Group should not be weakened in the long-term by Covid-19 headwinds. Its net cash balance sheet and undrawn facilities give welcome headroom of c£200m. Our view and valuation These were good results with margins, cash and book-to-bill as the highlights; the Group should be will placed for post Covid-19 recovery and there could be scope for some upward consensus revisions. The shares are trading on a FY21E PE of 26.8x and EV/EBITDA of 14.1x. We view Oxford Instruments as a pioneering company with scope to improve the structure of the Group through portfolio and operational adjustments. Recent disposals were welcome ahead of the Covid-19 pandemic and enhance the ‘tidy-up’ strategy of the business model. Given order lumpiness, a lack of visibility in some areas, and full valuation we remain at Hold.
The scientific instruments manufacturer has given helpful guidance on the immediate impact it sees from the Coronavirus on the Group for the current year ending March in its 18th March trading update. We previously had a figure of £54m for EBIT for the year, this is now guided to £47m to £50m due to the impact of the virus in China through the Q4 period to end March and enforced shutdowns at facilities in California. Oxford had substantial known shipments into China in the Q4 period (c22% of full year revenue with much of this in Q4) from its order book, so this was not a surprise to us. We reduce our EBIT expectation for FY2020F to £47m, taking a cautious view, but noting that these delayed order deliveries (we do not expect these to be cancelled) are set to fall into FY2021F. Whilst no guidance is given for FY2021F, we have adjusted our forecasts to account for a material impact on deliveries in the H1 period through to end September in Europe and North America. Recovery will come and for this business we expect secular trends to bounce back robustly – order fulfilment is being delayed, rather than cancelled for this type of equipment. Oxford is well positioned for future success with net cash resources in excess of £50m. We retain a BUY stance given the certainty of recovery.
Oxford Instruments (‘Oxford’), the scientific instrument specialist today announced it has completed the sale of its 47% share in Scienta Omicron, a leading company in Ultra High Vacuum Surface Science to a group of existing shareholders in the JV for a total consideration of £11.7m. In this note, we look to update our forecasts post the sale (albeit just breaking even) and factoring in positive underlying market conditions observed across the sector. Oxford has continued to progress with its Horizon strategy, and we believe management is able to deliver continuous growth and margin development given the breadth of its product portfolio and diverse end markets more than offsetting any political uncertainty. We expect Oxford to continue to benefit operationally from its restructuring programme, increasingly focusing on driving margins to economically sustainable levels, as well as the long-term secular growth trends seen in instrumentation. Oxford trades on an FY2020F PER of 21.4x (EV/EBITDA 13.0x, under IFRS16 leases) falling in FY2021F to a PER of 20.3x (EV/EBITDA 12.3x). We retain our BUY recommendation.
Taiwan exports rise for first time since 2018, IMF cuts global growth forecasts, Boeing in talks to borrow $10bn
OXIG RSW RNO TWD ZTF GHH
US small business sentiment dips in Dec, Japan machine tool orders rise m/m in Dec, Airbus surpasses Boeing in orders
Japanese core machine orders fell in October missing expectations, Construction equipment sales rose in China as Beijing boosts spend
H1’20 results are positive highlighting good growth and margin progress Oxford posted strong half-year results highlighting good growth, margin expansion and robust underlying cash generation. Revenue growth was driven by semiconductors, advanced materials and energy end markets, while the operating margin benefitted from increased revenues and operational improvements. An 8% increase in the interim dividend is encouraging. Revenues grew by 13.1% (9.1% organic) to £166.3m (INVe £160.0m). The operating margin expanded 120bps to 15.5% giving operating profit growth of 22.9% (+12.4% organic growth) to £25.8m (INVe £23.5m). EPS increased by 30.0% to 35.5p while the dividend increased 7.9% to 4.1p. The company remains in a net cash position with £14.2m of net cash at the half-year. Outlook Orders were up 6.4% to £173.3m (+2.8% organic and a book-to-bill of 1.04x) and the order book stands at £186.8m (+6.0% organic). Management expects FY20 to be in-line with expectations with the second half showing a more normal seasonal bias. We believe that consensus has potential to increase by mid-single digit percentage in FY20 when factoring the first half and current FX rates. Our view and valuation We view Oxford Instruments as a work-in-progress, and its recent updates have been reassuring. There has been underlying growth and some currency tailwind, and the full-year expectations were confirmed. Top-line progress has started to drop through to profit, due in part to investment in operational improvement. At this stage – in view of the lumpiness of orders, a lack of visibility in some places, macro constraints and valuation – we remain a Hold. On our current forecasts, the shares are trading on FY20E PE of 20.2x, EV/EBITDA of 11.8x, and dividend yield of 1.1%.
We believe that Oxford’s restructure and recovery programme (project Horizon), continues to progress. Much has been achieved over the past 18 months or so, in our view, revitalising and injecting greater commercial emphasis. This is visible in results, in our view, with more to come over the next two years. Much remains to be achieved in driving out efficiencies and, subject to short term global trade influences, we expect business metrics to continue to improve. Oxford should be well placed to deliver market leading solutions generating sustainable economic returns for shareholders, in our opinion, leveraging secular growth opportunities, in the long-term. Investment in R&D activities, expensed to income, continues at a high level sustaining competitive and technical leadership. In our view, margin potential from greater commercial focus remains, driving upgrade potential with strengthening cash flows and the balance sheet underpinning additional shareholder value creation. We retain a BUY stance.
Renishaw (RSW LN, £2.6bn) Q1 20 (30/09) trading statement – group revenues & metrology revenues both down 19% y/y due to large orders from the APAC region in Q1 19 and “reduced demand for our products as a result of the challenging global macro environment”; adj. PBT down 87% y/y; trading conditions expected to remain challenging through FY20 | Vesuvius (VSVS LN, £1.1bn) Q3 19 (30/09) trading update expects FY19 EBITDA of £180-190m; challenging market environment continued into 2H 19 with further weakening in EMEA | Good Energy (GOOD LN, £24m) awarded Green Economy Classification & Mark by London Stock Exchange
OXIG GHH VSVS GOOD
The heavy Q4 was delivered. The reduction in FY net debt was better than expected despite a short term increase in receivables and represents <0.5x ebitda. The order book grew in H2. FX is now a material headwind and causes us to cut FY19e adj PBT by 7% to £43m. CC growth assumptions are unheroic. Self-help is ongoing with benefits expected from personnel changes and price increases. ROIC is rising and our FY19e net debt improves further as w/c unwinds. A CY18 EV/EBIT of 11x remains attractive, representing a 35% discount to US peers. We note recent director buying of £124k of stock. Our TP is unchanged as this improving business should continue to re-rate.
Oxford Instruments’ AGM update has maintained guidance for the full year, but with a weighting to H2. Revenues and profits for the first five months are down at constant exchange rates, driven by lower sales of optical microscopy products and a change in mix towards magnetic and cryogenic systems which have longer lead times. Revenues for the first five months are flat post FX gains. Management expects a stronger H2 performance due to a combination of normal seasonal bias, plus the impact of new product introductions and FX gains. The shares have been good performers in 2017, reflecting the group’s progress in repositioning the business for growth. However the FY18 profile of a H1 decline and dependence on H2 is unlikely to reassure investors.
Futura Medical (FUM LN) H1 results: Eroxon® trial plan amended; licensing discussions underway | Goals Soccer Centres (GOAL LN) Further downgrades overshadow various strategic positives | Murgitroyd Group (MUR LN) Trading in line after record H2 performance | Oxford Instruments (OXIG LN) FY18 guidance maintained, but dependent on stronger H2 | Summit Therapeutics (SUMM LN) BARDA contract a major boost to ridinilazole | Vernalis (VER LN) Solid FY results driven by NCE collaborations; Tuzistra broadly in line
OXIG GOAL MUR FUM SMMT 0NR1
Clinigen Group (CLIN LN) Recent weakness another opportunity | Oxford Instruments (OXIG LN) FY17 performance in line with previous year | Scapa Group (SCPA LN) Ahead of expectations
OXIG SCPA CLIN
Oxford Instruments has announced the sale of its superconducting wire business to Bruker Corporation for $17.5m in cash. The wire business had seen declining sales and profitability due to competitive pricing pressure in its markets, generating a single digit operating margin in the most recent half year. The disposal will draw a line under these declines and provide a modest but welcome cash inflow to the group’s balance sheet.
Oxford Instruments has been through a very difficult couple of years. End markets have been weak and there have been strong FX headwinds. This has been compounded by the ban on high tech exports to Russia and pricing pressure in MRI superconducting wire. The combination of these events resulted in a series of profit downgrades and a significant de-rating of the shares. However, just as the market got carried away with the attractions of the company in 2012/2013, when the PER rating was well into the twenties, we think that it is now overly negative.
Oxford Instruments has reported FY16 results in line with expectations, with a decline in sales but a 3.6% increase in PBT due to cost saving measures, and a reassuring reduction in net debt/EBITDA. Market conditions remain uncertain, but order intake was almost in line with the previous year, and the first two months of FY17 have seen flat sales and a marginal improvement in profits. We do not anticipate making significant changes to our P&L forecasts, although we expect to reduce our forecast for net debt.
Oxford Instruments has provided a brief year end trading update, confirming trading in line with market expectations after a strong Q4 performance. In a second announcement, CEO, Jonathan Flint, has announced he will step down in May, to be succeeded by COO Ian Barkshire. This completes a clean sweep of management change, with the new FD, Gavin Hill, also starting in May and Chairman, Nigel Keen, due to step down in September. With more solid trading underway and a new management team coming in, we see potential for renewed interest in the group and a positive share price response
Oxford Instruments’ trading update has guided to Q3 performance in line with expectations and confidence in meeting forecasts for the year to March 2016. We read this as a small decline in sales in the period, but an increase in order intake and order book. Meanwhile net debt of £146m has scope to fall below our forecasts by the year end. We do not anticipate making significant changes to our forecasts and would expect a positive share price response.
Oxford instruments has announced the disposal of Austin Scientific, which had already been reported as discontinued in the recent interim results. The small loss-making business has been sold for c.0.25x sales, with proceeds of just $1.3m. We do not anticipate the disposal having a material effect on forecasts.
Oxford Instruments has reported a decline in sales but a 7% increase in PBT for H1 16. Management has reiterated existing guidance, highlighting strong growth in the order book of 15% on an organic basis and 21% in total. Debt covenants have been extended further, giving extra headroom to September 2016. We do not anticipate making significant changes to our forecasts and would expect the share price to reflect investor relief that prospects have not slipped further.
Ahead of the interims, we have reduced our forecasts to reflect the weak AGM update and subdued backdrop, cutting PBT and EPS estimates by 16% for FY16 and 27% for FY17. The shares have been declining as the market has tried to price low confidence in earnings and balance sheet leverage. We see potential for a bounce if the interims are less bad than feared, but also the risk of further downgrades and share price underperformance. We have tried to look through current difficulties and set our 579p target price based on 1.3x EV/sales applied to calendar 2017. Hold.
Oxford Instruments’ AGM update is guiding to reduced expectations for FY16 due to price pressure in superconducting wire and a difficult trading environment for industrial product sales in China. The profit downgrade for the group looks set to be greater than 5% (the negative impact from superconducting wire) but not into double digits (adjusted operating profit is reported to be ahead of the same period last year). We believe that this represents the 11th consecutive quarter of downgrades to consensus forecasts for the group. While the shares are already on a discount to the sector, we would expect further weakness today and would not look to turn more positive until there is evidence of stabilisation in trading.
Oxford Instruments has reported FY2015 results in line with expectations. Management has reiterated expectations for FY16 despite a slow start to the year, due to higher than expected cost savings. However we also note the flat order book and the guidance that £4m of service sales are expected to disappear, which provoke some concerns regarding prospects.
The Q3 trading update issued yesterday reported that whilst H2 revenues are expected to be ahead of H2 last year, they are likely to fall short of expectations, with adjusted PBT anticipated to be about £35m (compared with market forecasts of about £43m to £48m).
