Liberum initiates coverage on CareTech with 'buy' rating
Analysts at Liberum initiated coverage on CareTech with a 'buy' rating on Monday, noting that the UK market for social services was worth £16bn and still growing.
CareTech Holding
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16:14 26/09/22
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Liberum said CareTech was one of "the most experienced providers" of child and adult social services, delivering above-sector regulatory scores, below-sector staff churn and margins more than double that of its peers.
The broker said that continued execution implied a standalone valuation of more than 437p per share, but noted that CareTech's "game-changing" acquisition of Cambian could add more than 20% to mid-term earnings per share.
Liberum said: "Strategically, the deal will significantly enhance CareTech's market position, giving it a leadership position in children's services to match that of its adult business. Financially, the deal is significantly beneficial to CareTech, delivering mid-term EPS accretion of at least 30%."
Triggering the 'buy' rating was Liberum's target price of 525p per share.