Ergomed - Healthy CRO segment rebound confirmed
Ergomed released its 2021 trading update. Total 2021 revenues are expected to be approximately £118.6m, up 37.3% y-o-y (our and the consensus estimate was £119.6m), despite continuing FX headwinds (at constant exchange rates, CER, the growth is expected to be 44.3%). Revenues in the CRO segment increased to £58.1m, up 85.6% (97.4% CER; our estimate was £56.0m) indicating a good rebound in the CRO services industry after it was affected by the COVID-19 pandemic in 2020. Revenues in the PrimeVigilance segment increased to £60.5m, up 9.8% (14.2% CER; our estimate was £63.6m). Ergomed expects adjusted EBITDA to be ‘ahead of current market expectations’. Our 2021 adjusted EBITDA stands at £24.0m, marginally above the consensus £23.4m. We therefore keep our estimates and valuation of £751m (1,536p/share) unchanged ahead of the full results.Ergomed is engaged in the provision of specialized services to the pharmaceutical industry and the development of new drugs. Co. focuses on oncology, neurology and immunology and the development of orphan drugs. Co. is building a portfolio of co-development partnerships with pharmaceutical and biotech companies. Co. has two business segments: clinical research services, which provides clinical development services to clients ranging from pharmaceutical companies to small and mid-sized drug development companies; and drug safety and medical information services, which includes Co.'s subsidiary, PrimeVigilance Limited, a pharmacovigilance and medical information services company.
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