Stock of the day 08/06/2015 – Oxford Instruments PLC

Its crunch time for Oxford Instruments PLC, whilst delivers its post-profit warning 2014-15 preliminary full year results on Tuesday.

2014 was a tough 12 months for Oxford Instruments; after hitting a peak of £18.24 in the first week of January, Oxford Instruments posted declines for the majority of the year, ringing in 2015 at £12.65. This was to be the company’s highest price of 2015 so far, as things went from bad to worse at the end of January ’15 as the stock fell by nearly 28% in the space of the day, from £11.05 to £7.99. To give Oxford Instruments its due, since then the company has posted consistent gains, with a surge at the start of May helping to push the stock back to a current trading price of £10.78 (08/06/2015, IT-Finance.com).


(Source: IT-Finance.com 08/06/2015)

That dire decline felt in January was due to a profit warning, itself prompted by the then-fresh sanctions on Russia. The Great Bear is a big buyer of Oxford Instruments’ wares, so its removal as a viable market was understandably damaging to the company. Add on top of this a slower-than-expected recovery in Japan, another key region for the company, and Oxford Instruments’ outlook looks troubled. The company has forecast its full year adjusted pre-tax profits will be £35 million, far lower than both the £47.1 million it saw last year and the £46 million initially floated by analysts.

Yet in the intervening months between now and then Oxford Instruments has recovered a significant chunk of its January 22nd loss. It’s seen success with its Nanofab equipment, as well as launching a superfast EBSD (electron backscatter diffraction) detector. The announcement that Oxford Instruments had purchased Medical Imaging Resources for $24 million then helped pushed the stock higher by around 13% across the first week of May. At the end of that month OI then announced a joint venture with GD Intressenter AB to form, in the words of the company itself, ‘the world’s largest player in the highly specialised Ultra High Vacuum Surface Science field’. This gave the company another, be it smaller, boost, and helped lift it to just below its pre-profit warning price.

The combination of strong business news in the past few months and that profit-warning in January has left Oxford Instruments with a consensus rating of ‘hold’ with an average target price of £10.29.

Monday’s stock news:

The drinks were on Diageo this Monday, as the beverage behemoth posted around 6% in gains following reports that Brazil’s richest man, Jorge Paulo Lemann, was eyeing the company as a potential takeover target. Despite counter-reports stating that these rumours were just that, rumours, investors remained intoxicated by the manufacturer of Guinness, Smirnoff and Johnnie Walker, among others.

Diageo wasn’t alone on the takeover target board this morning; multinational infrastructure group Balfour Beatty jumped by around 3.5% as Monday continued, pushing it back near its 2015 highs as reports circulated that China’s Civil Engineering Construction Corporation was considering a £2 billion bid for the UK company.

On the other end of the spectrum, Foxtons saw another round of losses this Monday; last week’s competition law troubles with recent acquisition uSwitch pushed the property company towards one month lows, a feat it completed today by posting 4% losses following reports of an impending class action lawsuit. A group of private landlords is set to sue the company through law-firm Leigh Day due to disagreements over ‘hidden commissions’, something that could cost Foxtons up to £42 million.