Habib Ur Rehman
1 min read
In This Article:
Jefferies downgraded Compass Diversified (NYSE: CODI) from Buy to Hold on Friday, June 6, and dropped its price target from $28 to $7.30. The move follows sharp losses in the stock, down over 68% in the past six months, and rising uncertainty around an investigation tied to its Lugano subsidiary.
The investigation involves Lugano’s former CEO, accused of arranging unauthorized third-party funding and inflating inventory valuations. These issues led to a major overstatement of inventory and now cast doubt on the subsidiary’s reported performance.
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In response, Jefferies assigned zero value to Lugano in its sum-of-the-parts analysis following management’s own guidance. Recovery is expected to be long and uncertain.
With little clarity on how the situation will unfold, Jefferies has pulled back its rating and is waiting for more information before reassessing the stock’s upside.
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Disclosure: None.
