08/05/2006
Last month in Company Watch News, we reiterated our support for Careforce, the deal-hungry healthcare specialist we originally backed at 149p, with the shares trading at 151p.
This was on the strength of impressive interim figures to January, which showed losses of £612,000 turned round to pre-tax profits of £203,000, on revenues up 70% to £14m (£8.2m). Under chief executive Mike Rogers, Careforce closed the half with a strong balance sheet – net assets moved from £6.4m to £7.1m, of which £1m was cash.
Sadly, since then, a profit warning has left a severe dent in the share price, sending the market valuation sharply lower. In a surprise trading update, Careforce said profits for the year to July will likely miss market forecasts on the back of an expected £1m-£1.5m revenue shortfall, caused by low levels of new care referrals from many local authority customers. Cash-strapped social services departments tightened-up eligibility criteria for receiving the group's care services, for people with ‘low and moderate’ domiciliary care requirements.
Long-term, the company looks a winner with strong fundamental growth drivers in place, such as an aging population, and proven cost effectiveness for local authorities of its outsourced model. However, given the old adage that profit warnings coming in threes and our disappointment with the warning, we urge readers to sell and reinvest elsewhere.
| Market cap: | £14.65m |
| PE Forecast: | n/a |
| Share price: | 106.5p |
| AIM | £11.1m |
17.50p
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-1.50p
|
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| Other company articles: |
| 07/11/2006 |
| 15/05/2006 |
| 12/05/2006 |
| 08/05/2006 |
| 10/04/2006 |
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