Ergomed (ERGO): Healthy fundamentals for 2022

Edison Investment Research Limited Ergomed (ERGO): Healthy fundamentals for 2022 28-Apr-2022 / 07:00 GMT/BST London, UK, 28 April 2022 Ergomed (ERGO): Healthy fundamentals for 2022 Ergomed's FY21 results showed that adjusted EBITDA of £25.4m was ahead of our estimate of £24.0m and consensus of £23.4m. A strong order book (£239.7m, up 24.2% y-o-y), continued overall business growth and a rapidly improving balance sheet position Ergomed for another solid year of growth. Ergomed recently acquired ADAMAS Consulting Group, which we have now incorporated in our model. A UK-based quality assurance services provider, ADAMAS will diversify revenue sources (its offerings do not overlap with Ergomed's). According to management, the acquisition should be immediately accretive to earnings. We have raised our valuation to £777m or 1,577p/share (versus 1,536p/share previously). We have increased our DCF-based valuation to £777m or 1,577p/share compared to £751m or 1,536p/share previously due to rolling the model forward, updating our estimates and including the acquisition of ADAMAS. Our valuation implies an EV/EBITDA multiple of 26.5x (FY22e). Ergomed trades at a premium on FY22e EV/EBITDA (consensus) of 20.4x vs the peer average of 13.9x. Our bull case scenario valuation stands at 2,011p/share and our bear case at 1,227p/share, both based on our different sets of DCF assumptions (long-term sales growth and profit margins; for details, see our Outlook report).  Click here to view the full report or here to sign up to receive research as it is published. All reports published by Edison are available to download free of charge from its website www.edisongroup.com About Edison: Edison is a leading research and investor relations consultancy, connecting listed companies to the widest pool of global investors. By focusing on the volume and quality of investors reached - across institutions, family offices, wealth managers and retail investors - Edison can create and gauge intent to purchase, even in the darkest pools of capital, and then make introductions via non-deal roadshows, events or virtual meetings. Having been the first in-market 17 years ago, Edison now has more than 100 analysts covering every economic sector. Headquartered in London, Edison also has offices in New York, Frankfurt, Amsterdam and Tel Aviv and a presence in Athens, Johannesburg and Sydney. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. For more information, please contact Edison: Dr Jonas Peciulis [phone] [e-mail] Learn more at www.edisongroup.com and connect with Edison on:  LinkedIn  https://www.linkedin.com/company/edison-group-/ Twitter   www.twitter.com/Edison_Inv_Res YouTube  www.youtube.com/edisonitv Dissemination of a CORPORATE NEWS, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.

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1336723 28-Apr-2022