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Oxford BioMedica PLC (LSE:OXB), a UK£369.37M small-cap, operates in the healthcare industry, which faces demand for new drug development to meet new or persistent chronic illnesses, and ongoing need for biotech drugs as Baby Boomers continue to age. Healthcare analysts are forecasting for the entire industry, negative growth in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the UK stock market as a whole. Today, I’ll take you through the sector growth expectations, and also determine whether Oxford BioMedica is a laggard or leader relative to its healthcare sector peers. Check out our latest analysis for Oxford BioMedica
What’s the catalyst for Oxford BioMedica’s sector growth?
New R&D methods and big data analytics are creating opportunities for innovations, however, stakeholders have been challenged to keep abreast of this structural shift while under pressure to cut costs. Over the past year, the industry saw growth in the twenties, beating the UK market growth of 11.85%. Oxford BioMedica leads the pack with its impressive earnings growth of 43.01% over the past year. Furthermore, analysts are expecting this trend of above-industry growth to continue, with Oxford BioMedica poised to deliver a 72.34% growth over the next couple of years compared to the industry’s -14.67%.
Is Oxford BioMedica and the sector relatively cheap?
The biotech sector’s PE is currently hovering around 22.21x, relatively similar to the rest of the UK stock market PE of 17.81x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. Furthermore, the industry returned a similar 13.79% on equities compared to the market’s 11.98%. Since Oxford BioMedica’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Oxford BioMedica’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
Oxford BioMedica’s industry-beating future is a positive for investors. If Oxford BioMedica has been on your watchlist for a while, now may be the time to enter into the stock, if you like its growth prospects and are not highly concentrated in the biotech industry. However, before you make a decision on the stock, I suggest you look at Oxford BioMedica’s fundamentals in order to build a holistic investment thesis.
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1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
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2. Historical Track Record: What has OXB’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
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3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Oxford BioMedica? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.