CareTech revenues grow following Cambian acquisition

(Sharecast News) - Social care and education services business CareTech traded in line with expectations throughout the first half of the year, turning in a "substantial increase" in revenue and EBITDA driven by its acquisition of Cambian.CareTech turned in a performance ahead of the same period a year earlier on Wednesday, with EBITDA margins in line with market expectations in its core business and a "considerable improvement" on the same margins at Cambian.The AIM-listed outfit told investors on Wednesday that its integration plan for the combined business was "well underway" following the unconditional clearance issued by the Competition and Markets Authority on 8 February and confirmed that synergies of at least £3m worth of pre-tax profits in the first full year since acquisition were on track to being delivered.CareTech more than doubled its net debt to £297.5m in the half, reflecting the cash consideration and associated financing necessary for its Cambian acquisition.Chairman Faros Sheikh said: "I am pleased to report that CareTech's trading performance for the half year is in line with market expectations. The integration of Cambian is well underway and we are delivering all of our key objectives, including the delivery of the synergies we set out in our plan."Elsewhere, analysts at Liberum retained their 'buy' rating and £5.25 target price for CareTech, saying the firm was "far too cheap".Liberum's Graham Doyle said: "The market doesn't believe the 55% EPS growth, the 60% NAV uplift or the 33% de-leveraging that we forecast by 2022."Delivering this should be rewarded and today's trading update is another data point that provides confidence that management will do just that. If the market does not reward this then we see scope for management to return up to 40% of the market cap in cash to shareholders over the same period given the underappreciated strength of the balance sheet."As of 1030 BST, CareTech shares were flat at 333p.