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I was right about the Oxford Instruments share price. Here’s what I’d do now

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When I last wrote about nanotechnology company Oxford Instruments (LSE: OXIG) a few months ago, it had just seen a 15% share price increase in a single day. I was concerned whether it could rise more in the short term, especially as ‘reopening’ stocks gained ground. Nevertheless, my overall conclusion was that it would rise over time. 

The FTSE 250 stock is now up some 6% since late March, to 2,130p as I write. This may not appear like a big jump, but I do believe it is confirmation that the Oxford Instruments share price is headed in the right direction. And that my earlier call on it was correct. 

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Robust results boost Oxford Instruments share price

Its latest results support the idea as well. For the full-year ending March 31, its statutory operating profit increased by 33% to £53m. Its profits increased less according to adjusted numbers, which essentially reflect how a company views its own performance. But even then, the increase was a good 13.3%. 

It also started paying a dividend, though the yield is negligible. 

The company’s revenue was almost unchanged from the year before, with a marginal 0.3% increase. But in a year of “significant covid disruption” as Oxford Instruments terms it, I would not read too much into lacklustre revenue growth. 

Encouraging outlook

I am looking more closely at its forward-looking numbers instead. That includes the order book, which grew by 13% in the past year because of strength in its North American and Asian markets. Such an increase in the order book is encouraging because it assures future revenue. 

And cross-geography demand was a positive too, because it ensures that Oxford Instruments is not vulnerable to individual markets’ ups and downs. This is especially positive at the moment, when the spread of Covid can hamper business in specific geographies. 

A high share price need not be a deterrent

The company’s high share price can put off investors. It is just shy of its recent all-time highs right now. But that is true for many other stocks as well. The return of investor bullishness and the anticipation of better company performance post-pandemic have driven up share prices. 

I reckon that some of this optimism could die down for some stocks if companies’ performance does not pick up. But I doubt if that will be true for Oxford Instruments. In recent years it has been a financially stable company and its prospects look good too. 

Its share price has also increased over time. In the past year alone, it is up over 50%. In the past five years, it has more than tripled. Barring any unforeseen challenges, I reckon it can continue to perform. 

I maintain my view that the Oxford Instruments share price can rise higher. It is still a good long-term buy for me. 

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Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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