Barclays hails Oxford Instruments's increased focus, ups target

Analysts at Barclays revised their target price for Oxford Instruments's shares higher, hailing recent moves on its portfolio of businesses and balance sheet.

The decision to sell its Industrial Analysis unit would leave a group more focused on higher-margin nanotechnology and services, the broker said.

Its more recent set of results also revealed a return to OCC sales growth in Nanotechnology Tools in the backhalf of 2017 as well better margins across almost its businesses.

Asylum Research was the exception.

Hence, the shares offered further upside, especially if the firm could demonstrate the long-term higher-growth potential of its markets.

Against that backdrop, Barclays left its 'overweight' recommendation in place but lifted its target price from 1,070p to 1,145p.

The latter, Barclays said, reflected the rise in the average price-to-earnings multiple for UK Capital Goods to 20.0 and a 2.0% increase in its estimate for the company's fiscal year 2019 earnings per share.

Nevertheless, there remained work to do, Barclays said, pointing to the £45.8m of non-cash impairment charges the company booked in year and the struggles of individual companies within its portfolio.

On that last score, Barclays said: "The Board has already demonstrated it is taking a more active and involved approach to the management of its portfolio of businesses."