Wirecard Showdown Stuns Analysts, Raises Liquidity Questions
Wirecard Showdown Stuns Analysts, Raises Liquidity Questions
(Bloomberg) -- Wirecard shares plunged 62% on Thursday, after the company delayed publication of its annual financial results for the fourth time and revealed that auditors were unable to find about 1.9 billion euros ($2.1 billion) in cash.
Analysts and investors said the company is losing what little was left of investors’ trust. Focus will now turn to liquidity, they noted, as the payment firm faces a potential termination of loan agreements that threatens its survival.
The stock had ten buy-equivalent recommendations before Thursday’s announcement, with analysts forecasting an average 12-month price target that implied 49% in upside potential. At least five analysts have since suspended coverage and at least two lowered their ratings, according to Bloomberg data.
Here’s what analysts and investors had to say:
Independent Research, Markus Jost
(Rating cut to sell from buy)
- Uncertainty about Wirecard’s future rose significantly today, and there is now a very high risk of its customers turning elsewhere
- Slashes PT to EU40 from EU120 citing factors including insolvency risk, severe loss of trust, more pessimistic long-term assumptions and estimates
Goldman Sachs, Mohammed Moawalla
(Suspends rating)
- Suspends their investment rating, price target and earnings estimates as there is not enough of a basis for determining such rating or PT for the company.
- Says their previous investment rating, PT and earnings estimates for the company are no longer in effect and should not be relied upon.
- The bank’s previous rating was neutral with a PT of EU130
NordLB, Wolfgang Donie
(Rating cut to sell from hold)
- “It looks like the last remaining speck of investors’ trust has been squandered.”
- Wirecard’s situation can only be described as untenable, as the scandal has ballooned into a crisis threatening the company’s existence and degenerating the stock into a gambling bet.
- Advises investors to stay away from the stock and slashes its price target to 20 euros from 80 euros.
Mirabaud, Neil Campling
(Sell)
- “Wirecard’s retreat could be terminal.”
- Questions must be asked about the company’s ability to maintain its Visa and MasterCard licenses.
- Today’s developments could have far-reaching consequences for its ability to operate worldwide.
Morgan Stanley, Adam Wood
(Equal-weight)
- Wirecard’s acknowledgment that failure to complete an audit by June 19 may lead to the termination of 2 billion euros in loans moves the focus to its balance sheet and liquidity.
- Calculates that if 1.9 billion euros of cash balances cannot be verified, Wirecard might only have 220 million euros of available cash.
- Would expect Wirecard to seek covenant waivers if banks call the debt.
Deka, Ingo Speich
- “We are stunned.”
- Says a fresh start in management personnel is more urgent than ever.
Keefe, Bruyette & Woods, Sanjay Sakhrani
(Market perform)
- Says latest developments provide credence to the allegations raised by the Financial Times and some investors around the spurious nature of Wirecard’s Third Party Acquiring business.
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