World-leading FTSE biomanufacturing specialist Oxford Biomedica (LSE: OXB) is down 37% from its 16 January £9.57 one-year traded high.
This could signal a huge bargain to be had. Or it may simply reflect the downwards re-rating of a business that is simply worth less than it was before.
So, which is it?
Is the business fundamentally worth less?
There is one key reason why the stock is down, in my view. But crucially for savvy investors, it is a short-term factor only.
In its 2025 results, released on 26 March this year, the firm warned that H1 this year is likely to be loss-making on an EBITDA level. However, it explained this was due to the phasing of revenues, planned shutdowns and non-recurring costs. The company then went on to project double-digit operating EBITDA margin in H2.
It is expected to benefit from the completion of the Adeno-Associated Virus (AAV) and lentiviral vector technology transfers in France and the ramp-up of US revenues. These are the primary delivery vehicles used in gene therapy to transport therapeutic genetic material into a patient’s cells.
Management added that contracted orders of £224m in 2025 and revenue backlog of around £204m reinforce confidence in continued growth through 2026 and beyond.
Are these supported in analysts’ forecasts?
Profit powers any firm’s share price higher over time, but risks do remain for Oxford Biomedica, as with any firm.
One is if utilisation in its expanded US facilities ramps up more slowly than expected. Another is the variability in the timing of client programmes within the contract development and manufacturing model.
Nevertheless, analysts forecast that Oxford Biomedica will see its profits grow by a whopping yearly average of 75.3% to end-2029 at minimum.
So what’s the stock really worth?
The true value (‘fair value’) of a share is rarely the same as its current price. Its price simply reflects what buyers and sellers agree on at a particular moment. But its value is rooted in the strength and prospects of the underlying business.
For long‑term investors, that gap matters enormously. Historically, share prices tend to converge to their fair value over time. And that is why understanding the price-to-value difference can be so powerful for maximising investor profits over the long run.
Discounted cash flow (DCF) analysis is the best method I found while an investment bank trader for identifying fair value. It does this by forecasting future cash flows and discounting them to today’s value.
When those forecasts become less certain, the discount applied increases, which is why analysts’ DCF outcomes can differ. My modelling — including a 7.7% discount rate — shows Oxford Biomedica shares are 72% undervalued at their present £6.02 level.
That implies a fair value of £21.50 — more than triple the current price. So, if markets continue to correct this price-to-value gap over time, this could be an excellent buying opportunity if those DCF assumptions hold.
My investment view
I already hold shares in Oxford Biomedica, based on its strong underlying business offering and high profit growth forecasts.
Given the extraordinary dip in price that has exacerbated the already high price-to-value gap I will buy more soon.
I also have my eye on other deeply discounted stocks in other sectors, some with very high dividend yields too!
Should you invest £5,000 in OXB right now?
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Simon Watkins owns shares in Oxford Biomedica.
