Ergomed (ERGO) : FY21e EBITDA 'materially ahead' of consensus

Edison Investment Research Limited 
Ergomed (ERGO): FY21e EBITDA 'materially ahead' of consensus 
14-Jun-2021 / 08:14 GMT/BST 
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London, UK, 14 June 2021 
 
Ergomed (ERGO): FY21e EBITDA 'materially ahead' of consensus 
Yesterday, Ergomed held its annual general meeting (AGM) and provided a high-level year to date trading update (four 
months to end-April 2021). The company guides to FY21e revenues in line with market expectations (Edison GBP119.6m; 
consensus GBP120.0m). Strong revenue growth has continued in its PrimeVigilance division, in line with prior trends (in 
FY20 revenues grew by 30%), and its CRO business has seen a further acceleration of growth from H220 (H220 service fee 
revenues up 13.5% vs H120). This indicates a continued rebound after a tough H120 for the CRO industry due to 
widespread lockdowns. The most pertinent takeaway is that adjusted EBITDA is now expected to be 'materially ahead of 
market expectations' in FY21 (Edison GBP21.7m; consensus GBP21.9m) due to effective cost management and the Ashfield and 
MedSource acquisition synergies being realised sooner than expected. We maintain our estimates and valuation of Ergomed 
(GBP683m or 1,400p/share) ahead of the more detailed H121 trading update due in July, but note upside potential to our 
estimates and possible consensus earnings upgrades. 
 
We recently published an outlook report on Ergomed, where we outlined our base case valuation at GBP683m or 1,400p/share 
derived from our DCF model, implying an EV/EBITDA multiple of 30.5x based on our FY21 forecasts. We also analysed the 
sensitivity of our valuation to a set of DCF assumptions (long-term sales growth and profit margins) and found that a 
bull case would correspond to a valuation of 1,950p/share, while a bear case would correspond to a valuation of 995p/ 
share. 
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1207320 14-Jun-2021

 
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June 14, 2021 03:14 ET (07:14 GMT)