Eurofins Scientific stock collapses as short seller attacks

June 24, 2024 09:36 PM AEST | By Investing

Google News:

Eurofins Scientific stock collapses as short seller attacks

Recent News

Avoiding Grid Outages With Network Digital Twins

AppLovin would be more valuable without its 1P games, Morgan Stanley a...

Morgan Stanley downgrades Lululemon on weak US growth outlook

Canada to hit NATO defense target early - The Globe and Mail

Investing.com – Shares of Eurofins Scientific SE (EPA:EUFI) have plummeted nearly 20% Monday, marking by far the steepest decline among the CAC 40 index stocks.

The stock hit a low of 39.51 euros, a level not seen since March 2020.

The reason for this plunge is a damning report from the US fund Muddy Waters, which specializes in short selling. The report claims that Eurofins has employed an excessively complex corporate structure optimized for malfeasance.

The main issues highlighted in the report include related-party transactions involving real estate, complex accounting practices, including confusing cash disclosures, weak internal controls and governance, and questionable mergers and acquisitions.

However, in a note published Monday in response to Eurofins Scientific's plunge, analysts at Jefferies reminded that a similarly aggressive report covering the same themes was published in 2019 by another short-selling specialist. This context suggests today's revelations might be less impactful, as the 2019 report did not result in any scandal.

Nevertheless, Jefferies has maintained its "underperform" rating for the stock, but this is mainly due to a lack of confidence in the company's free cash flow (FCF) generation prospects, and their view of less attractive growth and margin prospects compared to larger peers.

Finally, it should be noted that Jefferies has also reaffirmed its price target of 48 euros for Eurofins Scientific's stock, which is 9% lower than last Friday's close, but 12% higher than the stock price at the time of writing, given the steep decline since the Paris Stock Exchange opened.

⚠️ GET 35% + 10% OFF on InvestingPro! The summer sales have started, and we are offering a 35% discount on the 1-year InvestingPro subscription, with an EXTRA 10% discount for our readers! Join InvestingPro to equip yourself with professional tools and follow our AI-driven strategies to boost your stock portfolio and know which stocks to buy regardless of market conditions! CLICK HERE to get the special reader's rate (35% off and an additional 10% off) and take your investments to the next level! ⚠️

This article first appeared in Investing.com

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.