Oxford Instruments (OX3) AI Stock Analysis

Company Guidance

Guidance: on an organic constant‑currency basis the group finished FY26 with order intake +8% (H2 +14%), driven by Advanced Technologies orders +28% while Imaging & Analysis orders were +1.9% for the year (I&A H2 >8%); revenue lagged orders, down ~3% FY26 overall (I&A -3% FY26, I&A H2 ≈+2%), with AT shipments concentrated in Q4 but AT expected to deliver high‑teens revenue growth in FY27 and I&A to deliver low single‑digit revenue growth. Margins: adjusted operating margin moved +30bps OCC in FY26 (FY25 restated 17.9% vs 16.4% previously) and management expects further margin progress, with AT making substantial progress toward a 10–12% margin range in FY27 (medium‑term AT target lifted to 12–15% and group medium‑term target ~20%). Cash and capital allocation: cash conversion 89%, a >£18m step‑change in free cash flow, £42m net proceeds from the NanoScience divestment, pension buy‑in ceased contributions, an additional £10m of free cash flow earmarked for capex/R&D in FY27, dividend growth targeted +6.3% and a £100m buyback program (≈2/3 complete at 31 Mar). Other metrics: order book closed FY26 +25% vs start (after being ~10% below at 1 Apr and +7% at period 6), an early FY27 multiyear order now supports the majority of FY27 revenue expectations, FY27 tax rate guided ~24.5%, and FX headwinds of ~£4.5m in FY26 and ~£3.2m expected in FY27.