Janney Capital Remains Neutral On PDL Biopharma Following The Resign Of Ernst & Young

In a research note released today, Janney Capital analyst Kimberly Lee maintained a Neutral rating on PDL Biopharma (PDLI) with a $7 fair value, following the reporting that the company’s auditor, EY, resigned last Thursday. 

Lee noted, “for FY12 and FY13, as well as in the interim period through September 11 th and that there were no disagreements on accounting principles or practices and financial statement disclosures and procedures. The company has requested that EY send a letter addressed to the SEC stating whether it agrees with the above statements. EY did not provide a reason for its resignation but our discussions with our forensic accounting analyst suggest that there could have been different reasons having to do with the recent restatement of revenues or fee structure for year-end work.”

The analyst added, “The company has begun a search for a new independent registered public accounting firm. Management revealed that the company should have an auditor in place within three weeks and that the accounting firm will be a known entity to the Street. Discussions with our forensic accounting analyst suggest that it would not be unusual to see a delay in 3Q financial reporting and 10-Q filing, since the new auditor will not be aware of what has happened in 3Q.”

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