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(Sharecast News) - HSBC initiated coverage of Oxford Instruments on Wednesday with a 'hold' rating and 2,900p price target as it said it is an undisputed expert in its field but that a strong share price performance since March 2020 might be stalled by export restrictions and change at the helm.
The bank said short-term opportunities and challenges seem to be balanced, i.e. further growth prospects for Oxford Instruments' high-tech tools might be come under pressure from stricter export regulations.
"We argue that existing and marginal investors might want to hear the views and strategic intentions of the incoming new CEO Richard Tyson, but that could take until Spring 2024.
"Hence, continued execution might be the main theme until then."
HSBC noted that the share price has more than tripled since March 2020. Its multiples have re-rated by 30% to 50% from their historical levels and are at a 20% premium to peers, albeit on 300 basis points or 15% lower margins, it said, adding that a further multiple expansion is unlikely.
Oxford Instruments produces high-end scientific instruments that enable material analysis, manipulation and imaging down to the atomic and molecular level.
