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The company suffered a 30% share price drop following negative trading update
Thursday 05 Jul 2018 Author: Lisa-Marie Janes

(ERGO:AIM) 177.3p


Original entry point:  Buy at 227p, 24 May 2018


Pharmaceutical services specialist Ergomed (ERGO:AIM) has crashed out of our Great Ideas portfolio after various delays hit sales.

In a trading update on 28 June, Ergomed revealed delays and reduced scope for the size of certain contracts, meaning 2018 revenue would be approximately 5% lower than market expectations.

The company said adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) are forecast to be ‘only modestly ahead’ of £2.8m delivered in 2017.

The market didn’t like the news, resulting in a 30%+ decline in the share price. In turn, our stop loss was triggered so our trade on Ergomed is automatically closed out.

Numis analyst Stefan Hamill says contract delays are a frequent occurrence in the contract research organisation business.

Hamill has downgraded net service revenues by 5% to £46.5m and says the sum of the parts valuation moves to 250p.

GIU - Ergomed

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