Following the integration of Aesica, Consort Medical (LON:CSRT) has expanded from its leadership position in drug delivery technology in Bespak to become a full-service contract development and manufacturing operation. With strong margin expansion already underway, we raise our EPS CAGR FY16-20e from 9.5% to 10.6%. Our DCF-based and peer group valuation is 1,292-1,399p.
Aesica advances the diversification strategy
We believe the 2014 acquisition of Aesica has improved Consort Medical’s ability to capitalize on the strong growth in outsourcing development and manufacturing functions in the pharma industry. With profitability already on an improving path, we see further upside to Aesica’s margins from 6.2% in H116 to 11% in FY20e, driven by operating efficiencies and growth in higher-margin business.
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