Piper Jaffray Downgrades MDC Partners (MDCA) to Neutral

Piper Jaffray downgraded MDC Partners (NASDAQ: MDCA) from Overweight to Neutral with a price target of $26.00 (from $30.00) as SEC risk outweighs rewards near-term.

Analyst James Marsh commented, "We are downgrading MDCA's shares to Neutral as the disclosure of an ongoing SEC investigation will likely increase the stock’s risk profile and compress its multiple. While we would prefer to give management the benefit of the doubt, we expect the market will not, so suggest investors move to the sidelines until the scope of the investigation can be determined and appropriately evaluated. And we should add the investigation is not exactly off to a great start with the CEO repaying nearly $9M in unauthorized expenditures. We believe the risk profile for MDCA shares has changed with lack of clarity on estimated legal costs as well as the length of the investigation. We still like what we believe to be strong underlying fundamentals at MDCA, however these investigations will make it difficult for an ‘acquisition growth story’ to outperform."

The firm cut FY 2015 EPS from $0.58 to $0.21 and FY 2016 EPS from $0.88 to $0.47.

For an analyst ratings summary and ratings history on MDC Partners click here. For more ratings news on MDC Partners click here.

Shares of MDC Partners closed at $27.98 yesterday.

You May Also Be Interested In

• Cleveland Research Upgrades Dynatrace Inc. (DT) to Buy, 'optimism underlying fundamentals are likely to support upside'
• Loop Capital Downgrades BJ's Wholesale (BJ) to Hold
• Equifax (EFX) PT Raised to $240 at Morgan Stanley