Eurofins Scientific SE rejected allegations made by Carson Block’s Muddy Waters Research that caused its stock to plunge the most in two decades, saying it’s confident in the integrity of its accounts.
The company’s profit and revenue growth over the past two decades should back up its investment decisions, Eurofins said in a statement, dismissing the short seller’s report as “insidious allegations.”
The stock recovered on Tuesday, rising more than 5% in Paris trading after Monday’s 16% decline.
“Trading is likely to remain choppy in the near term,” Nupur Gupta, an equity analyst at AlphaValue, wrote in a note. The firm is keeping its positive stance on the stock given Eurofins’s “market leading position in niche-testing end markets.”
The company defended its higher costs per employee, saying it uses highly skilled staff to test for the pharma industry. Luxembourg-based Eurofins also offers testing services to the makers of food and cosmetics, among others.
Eurofins will work together with its auditors to prepare further analyses to refute the allegations, it said.
“We have been and always will be committed to fair and clear disclosures,” said founder and Chief Executive Officer Gilles Martin.
Muddy Waters on Monday disclosed a short position and cast doubt on Eurofins’s financial statements, saying the firm’s reports could contain “material overstatements of profits, cash balances, and other asset values.”
The company responded that it’s confident in the integrity of its accounts, operational performance, internal controls and risk management.
It’s not the first time that Luxembourg-based Eurofins has been targeted by a short seller. In 2019, ShadowFall criticized the company’s governance, accounting at subsidiaries and debt levels. Eurofins defended its governance practices and rejected ShadowFall’s criticism as inaccurate and unfounded.
https://finance.yahoo.com/news/eurofins-rejects-muddy-waters-claims-073241570.html
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