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FTSE 250 cell and gene remedy trailblazer Oxford Biomedica (LSE: OXB) could ring a couple of bells with traders with out their remembering why.
Through the top of the Covid disaster, it was this agency that manufactured over 100m doses of AstraZeneca’s adenovirus-based vaccine. It did so at a document tempo for such a vaccine and with no hitch within the course of.
Except for offering such manufacturing companies to top-flight pharmaceutical corporations, it additionally works by itself therapies. These embody experimental remedies for Parkinson’s, most cancers, central nervous system issues, and eye illnesses.
For the reason that agency’s one-year traded low of £2.32 on 9 April, the share value has gone up 163%.
So, I took a deep dive into the enterprise to search out out why. I additionally ran the important thing numbers to see if there may be any worth left within the inventory.
Why’s the share value soared?
The the agency’s full-year 2024 outcomes had been launched on 9 April.
These confirmed income leaping 44% yr on yr to £128.8m, whereas gross revenue rose 34% to £53m. The earlier yr’s working lack of £184.2m shrank to a deficit of £39.4m.
The contracted worth of shopper orders signed within the yr was round £186m – a 35% enhance over 2023.
At that time, the agency forecast fiscal yr 2025 income of £160m-£170m, which might be a 24%-32% rise over 2024.
Over the medium-term, it expects to be the worldwide chief within the viral vector provide market. This centres on engineered viruses which are manufactured to ship therapeutic genes into human cells. In response to business knowledge, this market is forecast to extend in measurement from $6.3bn (£4.7bn) now to $18.8bn by 2030.
A threat to the agency is a failure in any of its key merchandise. This might injury its fame and be extraordinarily pricey to repair.
That mentioned, consensus analysts’ estimates are that its earnings will develop by a whopping 68% a yr to the tip of 2027. And it’s these that in the end drive any agency’s share value over the long run.
How had been the newest numbers?
Its H1 2025 outcomes launched on 23 September additionally regarded very optimistic to me. These confirmed income leap 44% yr on yr to £73.2m.
Over the identical time, there was a 166% enhance within the contracted worth of shopper orders signed over the interval – to £149m.
Oxford Biomedica additionally offered a income forecast for full-year 2026 – of £220m-£240m. It added that it expects income progress of 25%-30% in each 2027 and 2028.
Is the inventory undervalued?
One of the simplest ways I’ve discovered of ascertaining a share’s ‘fair value’ is to make use of the discounted money stream (DCF) methodology. This identifies the worth at which a inventory ought to commerce, primarily based on money stream forecasts for the underlying enterprise.
In Oxford Biomedica’s case, the DCF exhibits its shares are a shocking 63% undervalued at their present £6.09 value.
Subsequently, their truthful worth is £16.46.
As I’m over 50, I give attention to high-dividend-paying shares as I wish to use the revenue to cut back my working commitments. As this agency pays no dividend at current, it isn’t for me.
Nonetheless, if I had been even 10 years I might purchase it in the present day. I believe its robust earnings progress prospects ought to push its share value up, and it has an extended technique to go to satisfy its truthful worth.
