FY18 was a transformational year for Oxford Immunotec (OXFD) with the sale of its US diagnostic services business to Quest and announcement in January of the $100m share buyback programme. FY18 revenues modestly beat analysts’ consensus estimates, while the Quest transaction enabled a maiden FY profit. OXFD’s FY19 revenue guidance range of $69m to $72m is above analysts’ previous estimates. Sustained operational profitability is likely to depend on the company’s ability to grow its TB franchise.
Written by
Oxford Immunotec (OXFD) |
FY18 results focus on TB
|
Pharma & biotech |
QuickView
13 March 2019 |
Share price graph
Share details
Business description
Bull
Bear
Analyst
|
||||||||||||||||||||||
FY18 was a transformational year for Oxford Immunotec (OXFD) with the sale of its US diagnostic services business to Quest and announcement in January of the $100m share buyback programme. FY18 revenues modestly beat analysts’ consensus estimates, while the Quest transaction enabled a maiden FY profit. OXFD’s FY19 revenue guidance range of $69m to $72m is above analysts’ previous estimates. Sustained operational profitability is likely to depend on the company’s ability to grow its TB franchise.
FY18 results
OXFD’s non-GAAP TB product revenues of $15.6m in Q4 and $63m in FY18 represent y-o-y growth of 14% and 13%, respectively. Half of OXFD’s Q4 revenue came from the US, which saw mid- to high-teens growth. Asian TB revenues grew 13% despite disruption caused by a bad typhoon season, while European/RoW quarterly revenue grew by a record 11%. Operating expenses fell by $26.6m to $63.9m in FY18 due to efficiency gains and the divestment to Quest. This resulted in a maiden GAAP FY18 profit of $121.3m vs a loss of $32.9m in FY17. Reported cash at end-FY18 was $192.8m (vs $90.3m at end-FY17).
Share buyback should provide longer-term support
A c $100m share buyback programme was announced in early 2019 and is subject to shareholder approval at the AGM on 18 June. The five-year programme is expected to provide support to the share price. In addition, OXFD’s healthy balance sheet at end-FY18 is a further tool in generating shareholder value since it (and the company’s stock) provides another approach for in-licensing and M&A transactions. Organically, OXFD is expanding its T-SPOT.TB test from a batch kit to an automated test, which may provide additional growth. OXFD’s focus on TB brings some challenges, not so much in increasing the penetration of the T-SPOT.TB test globally, but replicating it either in TB typing or sensitivity, or in new non-TB tests.
Valuation: Still lags prospects
Last year’s debt pay down and tax loss utilisation from the sale of the US diagnostics business mean that OXFD is starting FY19 in a very different position compared with a year ago. The reinstatement of and increased FY19 revenue guidance are positive moves, but the GAAP treatment of the Quest transaction and the details of the ongoing service contract will partially obscure the investment case in the near term. Once these issues have been resolved, the current enterprise value of only c $276m should increase.
|
Consensus estimates
Source: Company data, Refinitiv |
EDISON QUICKVIEWS ARE NORMALLY ONE-OFF PUBLICATIONS WITH NO COMMITMENT TO WRITING ANY FOLLOW UP. QUICKVIEW NOTES USE CONSENSUS EARNINGS ESTIMATES.
|
|
Research: Investment Companies
Standard Life Private Equity Trust (SLPET) has broadened its opportunity set through the recent revision to its investment objective and policy, allowing it to make direct co-investments alongside private equity managers. While offering potential for improved returns, co-investments will only be introduced to the portfolio gradually and SLPET remains focused on maintaining a concentrated exposure to ‘best in class’ primary private equity fund opportunities, investing mainly in funds with a European focus. SLPET’s NAV total return has outperformed the LPX Europe index NAV return over one, three, five and 10 years. The trust pays dividends quarterly and its 3.7% prospective yield is the second highest among the five dividend-paying funds in its private equity fund of funds peer group.