 This skyrocketing growth stock is up 100% this year! Is it too late to buy?
Mark David Hartley
Wed 23 October 2024 at 4:33 pm BST 3 min read
Move aside Rolls-Royce and Fresnillo — this small-cap biotech share is skyrocketing past some of the UK’s leading growth stocks. Up 100% this year, OXB (LSE: OXB) is taking no prisoners as it fights to recover its losses from 2022.
Between November 2021 and October 2022, the share price crashed 78%, falling from a high of £16.78 to almost £3 per share. The price continued to fall through 2023 but has now recovered to £4.18 — the highest it’s been in over a year.
So what’s next for the stock?
Cutting-edge biotechnology
Previously known as Oxford Biomedica, OXB is a relatively small £442m stock listed on the FTSE All-Share index. The Oxford-based biopharmaceutical company focuses on cell and gene therapy, specialising in viral vector manufacturing. It has over 25 years of experience working with some of the leading pharmaceutical and biotech firms globally.
Recently it shifted to a pure-play contract development and manufacturing organisation (CDMO), aiming to position itself as a leader in viral vector services, helping other firms develop and commercialise gene therapies.
Over the past year, its portfolio grew to include 37 clients and 48 programmes, focusing on viral vector types like lentivirus and adeno-associated virus (AAV). The value of these contracts is approximately £94m as of 31 August.
Shaky financials
Last year was not kind to OXB, with the share price falling 50%. In the first half of 2023, it reported a 33% drop in revenues compared to the same period in 2022. The decline was primarily due to the non-recurrence of AstraZeneca Covid vaccine manufacturing. It also posted an operating EBITDA loss of £33.7m, higher than the £5.8m loss in the previous year. This was attributed to inflation combined with higher expenses related to its new Oxford Biomedica Solutions division.
Things seem to be improving in 2024, although first-half earnings were still somewhat disappointing. Both revenue and earnings per share (EPS) missed analyst expectations, by 4.7% and 110%, respectively. Although it posted a net loss of £32.5m, this was a 32% improvement on H1 2023.
The balance sheet looks okay for now, with a debt-to-equity ratio of 55.8%. However, it’s burning through cash and piling on debt, possibly due to increased operational expenses and rising bioprocessing costs.
Cash and liquidity are key areas to watch as the company expects to break even in EBITDA by the end of 2024. In an announcement made in September during the rebranding to OXB, new CEO Dr. Frank Mathias said it aims to improve its financial standing by focusing on its role as a CDMO.
It’s unclear how well the change to a CDMO will pay off, but the price is already reacting positively. However, the loss of a large client like Novartis could easily turn things around. It already faces tough competition in the CDMO market — any drop in performance could result in lost contracts.
If things go well, the transition should provide more stable, long-term revenue as opposed to the volatile revenues from internal R&D. I expect it will continue to do well so if I weren’t already a shareholder, I’d happily buy the stock today.
The post This skyrocketing growth stock is up 100% this year! Is it too late to buy? appeared first on The Motley Fool UK.
Mark Hartley has positions in OXB. The Motley Fool UK has recommended AstraZeneca Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2024 |
I'm sure you are correct jez, with the odds on favourite for that being detail of the multiple myeloma CAR-T deal first mentioned in March. It's just this quantification of the word soon which has been problematic. |
Throw the charts in the bin,its obvious to me now, OXB are solely NEWS DRIVEN, I can feel it in my water though, news is coming soon. |
With the usual caveat here that I'm a lth and so will inevitably have confirmation bias, I don't understand why anyone would currently short OXB.
I understand why they did it last year when it became obvious to some that there were large holders who had to sell either to meet redemptions or because of their own fund holding rules for constituent minimum market cap values, then when we were booted from the Morgan Stanley index last November, but of late there seems to be nobody mad enough to do it.
See
Regardless of all the things I regularly bang on about, the simple fact remains that in 2 months we are in the holidays which end this year and about to go into 2025 where OXB have repeatedly reaffirmed guidance of c£130m in sales and breakeven or better EBITDA.
That's a £10 share which you can buy today for £4 so why would anyone short it?
I think the economy simply remains bad in the UK, with the large possibility that Labour will set fire to what is left of it a week today, which leaves a lot of people - especially smaller investors - very cautious.
Countering that, I'm optimistic that we have not dropped back below £4 after the high volume day which carried us here and we currently sit about 357 in market cap on the London exchange. We need 325 or better by the 22nd and if it happens then that would definitely help change things for the better. |
Imvho they could try when they did as the "drop" was timed right after the large option plan RNS for senior execs so you would figure a valuable RNS would be very unlikely to be within 10-15 days of this just for the poor optics it would leave...my humble 2 pennies worth... |
The apparent attempt to push us back to ~350p last week was a failure as, I assume, too many of us topped up in the 360's. Will they (whoever 'they' are) try again - and why? |
certainly won't be dull here atm now we are outside of the rangebound period - the buying could be simply linked to II presentations from the management following recent results :) |
I share your cautious optimism Phil. Normally timing goes against OXB (because we are just lucky like that), but anticipation of inclusion back into the MSCI would seem to be ideally timed to help with the FTSE250 goal.
A couple of cautions:-
I've read the MSCI inclusion policy doc just now and it's as clear as mud to me, unlike the FTSE250 quarterly review which is simply market cap of 325th place or higher on the review date close.
Anecdotally we do know that in the MSCI August '23 review (roughly our current share price but remember we have more shares now so a higher market cap on the same share price) we were not deleted from the MSCI index, but by November '23 our market cap saw us booted.
Assuming (always dangerous I know) that there isn't a large gap between the addition market cap and the deletion market cap, then I'm quietly hopeful that OXB will be back in the MSCI this coming review.
It would also explain quite well our recent share price movement on apparently no news. |
Feels like a game of snakes and ladders! Well if repricing over next week gets us into the 500s, that might be enough for the 250, here’s hoping. |
On the subject of MSCI rebalancing I was sent this by a market professional in relation to another stock- I assume it applies here as well.
“The pricing period will be any of the last 10 days of October (18-31 October), with a very heavy bias to the first few days. The announcement of changes will be made on 07 November with rebalance on close 26 November.” |
2 thread merit marks to chillpill for remembering that one.
For those wondering, see this link (page 6)
Which was notification of us being removed from that index back in Nov 2023 because our market cap had dropped too low.
Definitely something to keep an eye on / bear in mind to help explain today as if we were booted out c200p last year, then every chance of the reverse manoeuvre this year at c400p.
Could easily have been some anticipation of that today. |
Hopefully back in the MSCI this time and FTSE 250 next quarter. |
Wall Street opening often sees a tick up for OXB it seems. |
Tick up in volume and firming of price pre and post Wall St opening.Could be relevant. |
If it holds this until close it will be back to where we were on close of Aug 3rd 2023 before the sky fell in.
No complaints from me but currently no obvious trigger for the bounce back today. |
heavy trading today it seems ... |
We're still living with the hangover of the vaccine work ending, losing Homology as a big customer and OXB resetting the earnings guidance about 13 months ago.
I'm sure that still has a lot of people cautious.
Without that worry OXB should never have dropped much below a fiver in 2023. Should have been c£7 for most of this year on the back of C£130m guidance and a tenner as we go into next year.
Unfortunately people remember these stories even if they don't currently follow OXB and of course we have had analysts like Numis doubting OXB's forecasts in the Times.
This is basically the root of my longstanding hope that zero OXB insiders buying means they have something good to announce at some point. Lucky timing with that and it could be all past sins forgiven. |
Nice rise today shame my Cambridge Cognition shares can't do the same.
Hopefully OXB reaches a fiver by the end of the year. |
Like a stopped clock |
Redirish
I understand you completely
I cancelled my stocko a few years ago.
I couldn’t see how it was able to have an accurate view/prediction on every listed company…I guess it’s accurate sometimes |
Harry - got you. |
I've just renewed my Stockopeadia subscription for the year. It continues to tell me that OXB, my largest holding, is a momentum trap. I continue to ignore it. And yet I paid..... |
I'd love to know wtf is goin' on 'ere |
takeiteasy,
I was just clarifying that I didn't ever say forced selling from £15. |
If you look at the free order book snapshot ( click the "today" bar on the chart and scroll to the bottom of the page) the numbers there at the moment are c60p better than Friday on no public news.
Maybe this is all down to that tip generating website, but surely something else here which we just don't know about yet? |
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