Oxford Instruments Plc (LON: OXIG)

Oxford Instruments PLC (OXIG) is an Abingdon, United Kingdom-headquartered leading provider of high technology products, systems and tools to leading scientific research communities and industrial companies in the world to enable their analytical, manufacturing, monitoring and research goals across a wide range of applications. The operations of the group are differentiated in three operating segments, namely Materials & Characterisation, Research & Discovery, and Service & Healthcare.

Interim Financial Highlights: H1 FY20 (ended as on September 30, 2019)

Source: Co. filings.

During the period under consideration, the group's order book increased by 8.9 per cent on a reported basis and by 6.0 per cent on a constant currency basis to £186.8m against £171.6m on 31^st March 2019. Group's revenue surged 13.1 per cent on a reported basis to £166.3m against £147.0m in a year-ago period, driven by enabled new growth opportunities from academic and commercial customers. However, it was partially offset by softening in silicon semiconductor, electronics and automotive production markets. Adjusted operating profit from continuing operations was up 22.9 per cent on a reported basis and 12.4 per cent on a constant currency basis to £25.8m. Adjusted operating margin stood at 15.5 per cent on a reported basis and 14.3 per cent on a constant currency basis. Supported by decent performance, the group's adjusted basic EPS leapt up by 30 per cent to 35.5p/share, and the company has declared an interim dividend of 4.1p/share, which was 7.9 per cent higher against the year-over period.

Stock Performance
 
Daily Price Chart (as on November 28, 2019), before the market close. (Source: Thomson Reuters).

Shares of OXIG zoomed on the London Stock Exchange in a month ago time, as it was up by approximately 24 per cent. Also, on a YoY basis, OXIG stocks performance was substantially higher and up by around 82 per cent and surged approximately 75 per cent on a year-to-date basis. In the past 52w, shares of OXIG registered a high of GBX 1,672.0 and a low of GBX 839.0, respectively.

At the time of writing (before the market close at 12:28 PM GMT), its shares traded 0.3 per cent higher at GBX 1,588.0. Also, traded well above the short-term immediate support level of the 20-day simple moving average.

Conclusion
The group’s performance in the first half of the FY20 was decent and recorded decent growth in terms of revenue, profitability, earnings and dividend distribution as well. Going forward, the outlook is favourable for the company to capitalise on the future available opportunities and will be benefited by the normal seasonal bias in the second half of the FY20. However, from a technical standpoint, it looks like after a massive rally it recorded in the past one-month, the price could consolidate in the near-term, as 14-day and 9-day RSI were oscillating near an overbought zone and the gap between MACD line and 9-day EMA is narrowing, which indicates stock could correct in near-term.

Therefore, based on the above rationale, we have given a "Watch" recommendation at the current price of GBX 1,588.0, while we look for any upcoming catalysts in the near term.

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