Tuesday newspaper share tips: Oxford Instruments' tough year

The Telegraph’s Questor is keeping an eye on nanotechnology specialist Oxford Instruments, which has had a tough year to date.

After two profit warnings due to Russian demand and weak trading in China, it noted that the shares have plunged in value by over half of what they were. Add to that Goldman Sachs downgrading it from a buy to a neutral last Friday, and the share price dropped even further.

The company has a high level of debt, Questor said, after it paid £175m for light measurement specialist Andor Technology. In its annual report, the company said it had net debt of £119m, down from net cash of £32m before the Andor deal.

Questor said that the rapid drop from record highs to five-year lows in the space of just 10 months is an example of how exposed equity investors are when a company raises debt levels. While the shares are a bargain at the moment, the newspaper pundit advised said it would be wary about buying until there’s some strong evidence of a recovery in the price.

Over at The Times, Tempus had a look into Capita’s bid to purchase Xchanging. It said Capita traditionally grows by acquiring companies and had begun the formal process by posting an offer document to Xchanging shareholders. While it put up a bid of 160p per share, it may have to fork out more if Apollo Global Management makes a higher offer.

Tempus noted that if the deal went through Capita would gain access to the company’s Xuber platform, which automates paperwork and could be used elsewhere in its insurance business. It believed it would immediately pay its way from day one at the current offer price.

It believed that the deal does look good even if it has to fork out a bit more cash to buy Xchanging, but thinks it’s worth buying Capita stock.