RBC Capital Markets raises target price on OXB

(Sharecast News) - Analysts at RBC Capital Markets hiked their target price on gene and cell therapy firm OXB from 800p to 930p on Tuesday following its recent oversubscribed £60m equity funding and revenue guidance reiteration. RBC Capital Markets highlighted that OXB, formerly known as Oxford Biomedica, now sees "growing client demand, including visible near and medium-term opportunities across all clinical phases, including late-stage and commercial supply".

The Canadian bank said this necessitates capacity expansion earlier than previously anticipated, with OXB taking the opportunity to build out US commercial-scale capacity for viral vector manufacturing and associated fill-finish services. It also noted that OXB sees opportunities to improve the rest of its network, improve asset utilisation, and continue to innovate.

"Having largely derisked 2025, we increase our one-year price target to 930p, from 800p, which continues to be based on a 20x 2028E EBITDA multiple and a 25% pa discount rate - now with one fewer years of discount in light of improved visibility," said RBC, which reiterated its 'outperform' rating on the stock.

Other than adjusting for the new equity, increased capex and guided margin trajectory, RBC reckons the most interesting change in forecasts was related to the revenue guidance. For 2025, guidance for £160-170m revenue was unchanged, but for 2026, revenue was now expected to be £220-240m versus prior guidance of less than £220m.

"This isn't necessarily much of a change, but the £220m was originally presented as a 2026 target in April 2024, and was caveated by "at CER" - the USD/GBP exchange rate was around 1.25 at that point, and now sits around 1.35. Although the company has not disclosed the proportion of revenues denominated in USD, we assume it is meaningful in light of the biotech industry's US weighting. If it is around 50%, this implies a 5% revenue headwind since then, implying that the new guide is a 5% uplift at the lower end," said RBC, which added that the new range implied that OXB now has more certainty visibility.

Reporting by Iain Gilbert at Sharecast.com