Oxford Biomedica (LSE: OXB) started out as a trailblazing FTSE cell and gene therapy specialist. Some people might remember it as the firm that manufactured over 100m doses of AstraZeneca’s adenovirus-based vaccine during the Covid crisis. It did so at a record pace for such a vaccine and without a hitch in the process.
Today, it is a focused, cash‑generating biomanufacturing specialist with long‑term contracts, rising revenues, and exceptionally strong earnings growth prospects. Yet despite this transformation, the market still values it like a speculative biotech research outfit.
Over time, share prices tend to converge to their true value; so, how great a potential opportunity is this for savvy investors?
Tremendous earnings growth potential
Sustained earnings growth drives any firm’s share price over the long run. A risk here is any operational hiccup in the ongoing scaling up of its large manufacturing capabilities. Another is increasing competition, which could squeeze its margins.
Nonetheless, analysts forecast its earnings will grow by a whopping average of 74% a year over the medium term at minimum. This looks well supported by several drivers highlighted in its recently released (26 March 2026) results. These saw a 20% year-on-year jump in contracted client orders to £224m and a 36% increase in revenue backlog to £204m.
Production soared 32% and development revenues rose 27% on more client programmes being rolled out. This includes new multi‑year commercial supply work for Bristol Myers Squibb, underpinning expectations of sustained medium‑term earnings growth.
Overall, revenue increased 31% to £168.7m, underlining the strong uplift in client activity across its gene‑therapy projects. And net cash surged 169% to £55.4m, supported by improved operating performance and upfront client payments.
Looking ahead, Oxford Biomedica expects 2026 revenue of £220m–£240m and an operating EBITDA margin of around 10%. With new manufacturing facilities coming online soon, management expects 25%–30% annual revenue growth by 2027/28. EBITDA margins by that time are projected to be well over 20% a year.
So where should the shares be trading?
Discounted cash flow analysis identifies the price at which any stock should trade. It does this by projecting future cash flows of the underlying business and discounting them back to today.
Some analysts’ DCF modelling is more bearish than mine depending on the variables used. However, based on my DCF assumptions — including a 7.7% discount rate — Oxford Biomedica shares are 57% undervalued at their current £6.32 price.
That implies a fair value of around £14.70, more than double where the stock trades today.
And because of the long-term relationship between a share’s price and fair value, this suggests a potentially superb buying opportunity to consider today if those DCF assumptions hold.
My investment view
Oxford Biomedica now looks far more like a scalable, cash‑generating biomanufacturing business than the speculative biotech the market still prices it as.
Earnings look set to accelerate sharply, and my DCF work points to a valuation more than double the current share price.
That combination of operational momentum, financial strength and deep undervaluation means I will buy the stock as soon as possible.
