Ergomed PLC (AIM:ERGO, ETR:2EM) has finally drifted into Liberum Capital’s coverage universe range, with its analysts initiating with a 'buy' recommendation and a 1,355p price target.
Because of its premium rating, it had been hard to make a case for the pharma services group, but with the shares largely marking time over the last few years and Ergomed delivering strong growth it has derated enough, the analysts said.
Earnings growth should average 12% annually over the next three years, with operational gearing boosting margins, while its move into phase III trials will boost its appeal to larger groups.
“In our view, Ergomed’s market position, growth potential and attractiveness as a takeover candidate support a premium valuation,” the Liberum analysts concluded.
Ergomed shares were trading at 1,272p on Monday afternoon, down 1.6%.