Interactive Investor

Biotech star reveals record results

22nd September 2021 13:18

Graeme Evans from interactive investor

Our equities writer picks out some of the big movers in the market today.

As one of the best-performing FTSE 250 stocks of 2021, Oxford BioMedica (LSE:OXB) kept its following of retail investors happy today with record results and an acceleration of expansion plans.

The gene and cell therapy group, whose valuation has soared on the back of a vaccine manufacturing deal with AstraZeneca (LSE:AZN), revealed £50 million of fresh investment to fund further development of the Oxbox facility it constructed in 2019.

The backing from India's Serum Life Sciences in exchange for a 3.9% stake represents the start of a “strong and collaborative relationship” for two companies who have played a big part in the fight against Covid-19.

Chief executive John Dawson added: “This investment will allow us to expand capacity at Oxbox at a time when our business development pipeline has never looked stronger.”

Shares leapt another 6% or 86p to 1,564p, meaning they have now risen 87% in the past year, after the company also reported half-year revenues 139% higher at £81.3 million for underlying earnings of £27.1 million, versus a small loss the previous year.

R&D and other costs mean the second half won't be as strong, but the company's guidance still points to an earnings figure at least 14% higher than Peel Hunt's previous estimate. The broker believes the shares have the potential to go much further, based on a target price of 2,150p.

The Astra vaccine collaboration gave a significant boost to the half-year results, but outside this area the company has signed a new three-year agreement with Boehringer Ingelheim to manufacture and supply a range of viral vectors.

The company, which was spun out of the University of Oxford in 1995, has seen its fortunes transformed by a wider recognition that cell and gene therapy can change the face of healthcare, including in the treatment of cancer or liver diseases.

The group described the first-half results as “exceptional” as it ended the period with £61.3 million in cash, up from £46.7 million in December, and a headcount of 740 people across several locations in Oxfordshire.

It said existing partnerships with Novartis (NYSE:NVS), Juno/Bristol-Myers Squibb (NYSE:BMY) and Beam (NASDAQ:BEAM) continue to progress well. Oxford added: “With the business development pipeline looking stronger than ever, the group looks forward to a busy second half of 2021 and maximising the many opportunities ahead.”

Ten Entertainment on the up

Another stock performing well after posting interim results was Ten Entertainment Group (LSE:TEG), the operator of 46 bowling and family entertainment centres in the UK.

Its shares rose 4% or 11p to 266p after reporting “exceptional” like-for-like sales growth of 35.8% for the 17 weeks since re-opening its sites in mid-May. Most of the improvement has been driven by increased footfall.

The company said: “UK staycations have undoubtedly been beneficial, but this very strong performance shows the underlying appeal of our customer proposition.”

With the performance stronger than previous management expectations, Ten is now targeting double-digit sales growth in 2022 compared to the 2019 baseline.

House broker Liberum said: “Ten Entertainment has had a dream restart with all the innovation and investment coming to fruition, which, alongside a staycation boost, has pushed like-for-like sales up 42% over the summer versus 2019 levels.”

The broker has a price target of 325p, adding that shares look undervalued on 9.5 times forecast 2022 earnings. Peel Hunt is also impressed after upgrading from 325p to 350p.

Analyst Douglas Jack added: “Ten Entertainment is in a sweet spot of the sector, benefiting from growth in experiential leisure, but with little exposure to labour and buying costs.”

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