On Wednesday, Deutsche Bank (ETR:DBKGn) adjusted its outlook on Oxford Instruments Plc (LON:OXIG:LN) (OTC: OXINF), raising the price target to GBP 30.00 from GBP 28.00. The firm maintained a Buy rating on the stock.
The adjustment reflects the company's overall results, which were in line with expectations, despite Oxford Instruments absorbing significant losses in its quantum business due to its exit from commercial activities in China. This move resulted in a loss of approximately GBP 5 million, as previously disclosed.
The company's order book stands at GBP 301.5 million, marking a 3.5% currency-adjusted year-over-year decrease, including the removal of around GBP 23 million worth of quantum orders. Nonetheless, this order book provides a solid foundation for the year ahead.
Deutsche Bank's analyst highlighted that the updated two-division strategy of Oxford Instruments clarifies the opportunities for further improvements, especially in terms of margins, and that the medium-term targets should align with expectations.
Oxford Instruments is currently trading at a calendar year 2024 estimated enterprise value to EBITA (EV/EBITA) multiple of 16.5 times and a price-to-earnings ratio (PER) of 22.7 times, or 21.3 times excluding cash. These figures are notably lower than the international peer group averages of 22.5 times for EV/EBITA and 26.1 times for PER.
The price target increase to GBP 30.00 is based on a calendar year 2025 estimated EV/EBITA multiple of 20 times. This revision takes into account the rise in the average EV/EBITA multiple of Oxford Instruments' selected international peer group since the previous target was set. The analyst's commentary underscores the company's solid position and future prospects despite the recent operational challenges.
InvestingPro Insights
In alignment with the recent outlook from Deutsche Bank, Oxford Instruments Plc (OXIG:LN) (OTC: OXINF) has demonstrated notable financial resilience and potential for growth. An InvestingPro Tip highlights that the company has been trading at a low P/E ratio relative to near-term earnings growth, suggesting that it may be undervalued compared to its future earnings potential. This is particularly relevant given the company's strategic two-division approach aimed at margin improvements and alignment with medium-term targets.
Further enriching this perspective, real-time data from InvestingPro reveals that Oxford Instruments has experienced a significant return over the last week, with a 1 Week Price Total Return of 7.77%. Additionally, the company's strong return over the last three months, indicated by a 3 Month Price Total Return of 21.43%, reflects investor confidence and the stock's robust performance in a relatively short timeframe.
On the financial health front, Oxford Instruments operates with a moderate level of debt and its cash flows can sufficiently cover interest payments, an InvestingPro Tip that underscores the company's financial stability. This is a crucial aspect considering the recent operational challenges and strategic exits from certain markets.
Investors seeking a deeper dive into Oxford Instruments' financials and future outlook may find additional value in the comprehensive analysis available on InvestingPro. There are 8 more InvestingPro Tips for Oxford Instruments, providing a more granular view of the company's performance and prospects. For those interested, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at https://www.investing.com/pro/OXIG.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.