Berenberg hikes target price for Oxford Instruments

19th Jun 2024 09:41

(Sharecast News) - Berenberg has hiked its price target for shares of Oxford Instruments by 12% and reiterated a 'buy' rating, saying that the stock still trades at a significant discount to others in the sector despite strong growth momentum.

Annual results from the industrial and scientific research tools group last week showed "good headline momentum", according to Berenberg, with revenues up 9.8% at constant currency.

Oxford Instruments also unveiled a new simplified business structure, where eight business units and six end-markets would be consolidated into just two divisions (Imaging and Analysis, and Advanced Technologies) and three core markets (materials analysis, semiconductors, and healthcare and life science).

Meanwhile, future medium-term targets - which included a 5-8% organic compound annual growth rate, margin improvements to above 20% a cash conversion projection of 85%+ - "appear reasonable", Berenberg said.

The broker has lifted its target price for the stock from 2,640p to 2,945p. Despite a 27% jump in the share price over the past two months alone, Berenberg said: "Its shares currently trade on an FY26 EV/EBIT multiple of 15.6x - a double-digit discount versus peers."

The stock was down 0.2% at 2,625p by 1019 BST.