CompuGroup Medical SE: Decent start to 2022; outlook reiterated, BUY confirmed

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CompuGroup (CGM) reported healthy top-line/EBITDA results in Q1 2022, with midsingle digit organic revenue growth, but margins continued to remain under pressure owing to growth investments. It also met its over 70% mid-term recurring revenue mix target in Q1 (71%). The group reiterated its 2022 guidance. CGM continues to progress well towards its mid-term targets of organic revenue growth of at least 5% (2021-2025) and an adj. EBITDA margin of ca 25% by 2023E and ca 27% by 2025E, which looks reasonable, as it aims to capitalise on past investments and leverage its cost base. In our view, the investment case is fully intact. The company offers products at hand to support doctors, pharmacies, hospitals, and other healthcare professionals on their path towards the high demand space of digitisation. We maintain our recommendation of BUY, with an unchanged price target of EUR 75.00.

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