Oxford Instruments' growth continues under new boss

Oxford Instruments (OXIG) owes a lot to their former chief executive. Ian Barkshire retired after 25 years at the tech manufacturer, with Richard Tyson taking over six weeks ago. Over Barkshire's seven-year tenure as the head of the business, OXIG easily outperformed the FTSE All-Share index after a series of positive results.

It was a similar story on the morning of its results for the six months to 30 September, the last reporting period under Barkshire's tenure. Shares bounced 6 per cent after the company posted a bump in revenue and pre-tax profit thanks to a boom in its x-ray and nanoscience business. It said the growth of that arm had "primarily been driven by strong sales and demand for our optical microscopy, scientific camera, and optical spectroscopy products".

The driving force behind that need might sound specific, but that is key to OXIG's strategy. As the company puts it, its revenue growth is down to a "focus on specialist niches within structural growth markets".

Its focus on the micro does not mean the company is unexposed to the macroeconomic picture. Last year, pandemic supply chain disruptions affected its figures. This year, the easing of those pressures saw its revenue grow, particularly in China. However, as has been the case in previous years, its results would have been better had exchange rates not dragged down its numbers. Revenue increased 4.6 per cent but 7.5 per cent on a constant currency basis.

FactSet figures show the shares currently trade at 18.2 times consensus forecast earnings per share for 2025. Considering its last quarter century of growth, that seems a fair price. Buy.

Last IC view: Buy, 2,735p, 13 Jun 2023