Aerojet Rocketdyne Slips After Glasshouse Research Short Report

Shares of Aerojet Rocketdyne (AJRD) are sliding after it was mentioned cautiously in a new short report from Glasshouse Research. According to the report, the stock's "premium valuation erroneously based on faux earnings is unwarranted given the material long-term structural issues and near-term accounting risk".

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'DELAYED PROJECTS, LIBERAL USE OF POC ACCOUNTING': Glasshouse Research initiated Aerojet Rocketdyne with a price target of $14.50, arguing that management has taken "significant advantage of its PoC accounting and recognized revenue prematurely" in its respective long-term contracts. Further, the short report pointed out that "in order to mask true economic earnings" which have faltered in recent periods, management has underfunded some of its key reserves and capitalized recurring expenses. Glasshouse Research added that it believes missed milestones and delays have accelerated in the last two years as unbilled receivables have skyrocketed and advanced payments have plummeted. Overall, "premium valuation erroneously based on faux earnings is unwarranted given the material long-term structural issues and near-term accounting risk," the report contended.

PRICE ACTION: In late morning trading, shares of Aerojet Rocketdyne have dropped almost 2% to $30.04. Reference Link

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