£216.8m market cap
450p last close
Ergomed is a global full-service CRO business with a core focus on the US and EU. It provides Phase I–III clinical services in addition to post-marketing pharmacovigilance (Phase IV) services through its PrimeVigilance division. Ergomed is predominantly focused on oncology, orphan drugs or rare diseases and pharmacovigilance.
Investment summary
We are initiating coverage on specialist pharmaceutical services provider Ergomed. We believe it should prove relatively resilient during the COVID-19 crisis and has the fundamentals in place to execute its growth strategy. Ergomed announced impressive audited numbers for FY19, with revenue up 26% to £68.3m and EBITDA up 5.5x to £12.5m. The FY19 announcement is effectively Ergomed’s fourth profit upgrade for FY19 and a small beat on recently reset FY19 expectations. Ergomed trades at a discounted EV/EBITDA of 10.1x vs the contract research outsourcing (CRO) sector average of 11.5x (FY20). We value Ergomed at £186m or 399p/share. Ergomed’s strong organic growth is benefiting from a clear strategic focus on high growth pharma sectors, margin control and order book growth (up 15% to £125m in FY19, giving 90% visibility to 2020).
Y/E Dec |
Revenue (£m) |
EBITDA (£m) |
PBT (£m) |
EPS (p) |
P/E (x) |
P/CF (x) |
|---|---|---|---|---|---|---|
| 2018A | 54.1 | 2.3 | 1.0 | 1.9 | 236.8 | 224.0 |
| 2019A | 68.3 | 12.5 | 8.6 | 19.8 | 22.7 | 18.0 |
| 2020E | 84.8 | 14.9 | 13.7 | 24.9 | 18.1 | 16.0 |
| 2021E | 100.3 | 17.6 | 16.5 | 28.9 | 15.6 | 13.3 |
Sector |
|---|
| Healthcare |
Share price graph
Balance sheet |
|
|---|---|
| Forecast net cash (£m) | 16.5 |
| Forecast gearing ratio (%) | N/A |
Price performance
% |
1m |
3m |
12m |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|||||||||||||||
| *% relative to local index | |||||||||||||||
Key management |
|
|---|---|
| Miroslav Reijanovic | CEO |
| Richard Barfield | FD |
