A day after the publication of the auditors' report into the conduct of Taro Pharmaceutical Industries (Nasdaq: TARO), and the resignation of the company's CFO Kevin P. Connelly, CIBC World Markets has downgraded its rating for the company to "Sector Underperformer", with a target share price of $9.
CIBC says that although Taro is current on debt service payments, its ability to make interest payments and level of current cash generation are uncertain.
The state of affairs at the company appears to be going from bad to worse, continues the report, and CIBC suspects there is no quick fix. At current levels, shares are kept afloat by increased expectations of a takeout.
The report says that a bid is a real possibility, though significant premium to current levels is unlikely in its view given financial distress.
Published by Globes [online], Israel business news - www.globes.co.il - on October 31, 2006
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