(Bloomberg) -- Analysts began backing away from embattled German property owner Adler Group SA after a short seller alleged that the company was “built on systemic dishonesty.”
JPMorgan Chase & Co.'s Tim Leckie suspended his overweight rating and 32-euro target price, citing “legal, regulatory or policy reasons, or due to a lack of a fundamental basis.” At Kepler Cheuvreux, Thomas Neuhold dropped his buy recommendation and 36-euro target and called for an independent audit, saying “more transparency needed.”
Viceroy Research alleged Wednesday that Adler's property portfolio is overvalued and the company had engaged in deals with undisclosed related parties. Adler rejected the findings of the Viceroy report, saying its real-estate values have been verified by independent appraisers.
“The serious allegations that ‘values are transferred to undisclosed related parties' are difficult to verify/reject,” Kepler's Neuhold wrote. “We don't share the view that Adler's assets are grossly overstated and that the company does not have enough good assets to dispose of to deleverage, and therefore we see no material default risk.”
Read: A Controversial Tycoon Sits on Adler's $9 Billion Pile of Debt
Adler Group's stocks and bonds rose on Friday after the firm's largest shareholder secured the option to sell half its stake at a higher strike than the shares closing price on Thursday.
The shares climbed 9.5% to 12.65 euros at 9:40 a.m. in Frankfurt. They had plunged 11% on Tuesday, before the Viceroy report came out, and a further 26% Wednesday.
Three analysts still have ratings on Adler's stock, according to data compiled by Bloomberg: Barclays Plc's Sander Bunck, underweight, 20-euro target; HSBC Holdings Plc's Thomas Martin at buy, 34 euros; and Winfried Becker, Frankfurt Main Research, buy, 31 euros.
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