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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
Oxford Instruments plc
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
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
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
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
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
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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).
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
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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
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
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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.
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
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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
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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).
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