Ergomed - Diversified services offering proves resilient

According to Ergomed’s H120 trading update, the business successfully navigated the COVID-19 pandemic in H120. Underlying revenues in the PrimeVigilance segment grew 36.0% (or 62.1% including the recent acquisition), while the CRO segment, unsurprisingly, saw a modest decline as a result of the widespread lockdowns. The growth prospects, however, remain intact in our view. Ergomed has proved to be a resilient business, which we attribute to a diversified and well-balanced pharma services offering (pharmacovigilance and CRO). Strong H120 sales and a record order book at 30 June 2020 should see Ergomed carry its strong momentum into 2020 and beyond. Net positive revisions to our estimates and a material expansion of peer multiples has led to a significant upgrade to our valuation to £345m or 713p/share.