DAVY VIEW

UDG Healthcare (UDG) has traded materially better than expected through H2 2020. As a result, FY 2020 EPS came in 8% ahead of expectations, with 34% growth in Sharp the standout performance. Cash conversion was also excellent at 88% underlying (versus mid-term guidance of 65-70%). We expect to put through 3% upgrades to FY 2021 and 2022 EPS. On valuation, with Sharp now approaching 40% of profits, we think investors will increasingly look to value UDG on a sum of the parts (SoTP) basis; this potentially points to a value in excess of £9 per share. Note that a pre-recorded results presentation is already available on the UDG website, with a Q&A session to follow at 09:00.