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January 2021

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • ERGO
  • Price:
  • 1055p
Ergomed has acquired MedSource, a US-based specialist oncology and rare disease CRO, which doubles its US footprint in terms of employee numbers (+110 US employees to over 200 now). It adds 20 new clients and a >US$41m order book of future contracted revenues. Ergomed is paying US$18m upfront (c.10x 2021E EBITDA), with an earn-out of up to US$7m based on 2021 results, both structured 90% in cash, 10% in shares. In 2019, MedSource recorded service fee revenue of US$19.3m and adjusted EBITDA was US$1.3m, which makes the deal eps enhancing from day one. Numis has lifted its eps forecast by 5% for both FY20 and FY21 to 28p and 30.6p, respectively. A main buy at 295p in October ‘19, gain 258%. Strong hold for more. ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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