Eargo set to open at record low as JPM cuts rating on DoJ investigation

Eargo

23/09/2021 11:21

** Shares of hearing aid maker  EAR.O  drop 57% to $9.31
premarket
    ** Stock set to open at record low and top pct loser across
U.S. exchanges
    ** After market close on Wednesday, co said it was target of
criminal investigation by the Department of Justice related to
insurance reimbursement claims  urn:newsml:reuters.com:*:nL4N2QO3M6
    ** Co also withdrew its outlook for the year ending Dec. 31
    ** J.P. Morgan downgrades EAR to "underweight" from
"overweight" and cuts PT to $11 from $44, implying a downside of
~49.2% as of stock's last close
    ** JPM notes federal insurance revenues represent ~50% of
co's sales 
    ** Says with such a large portion of go-forward revenues
tied to a highly unpredictable and hard to diligence binary
event, it expects shares to underperform
    ** Says the involvement of the federal government adds an
additional element of uncertainty that makes it very difficult
to confidently forecast the company's insurance revenues
    ** EAR has enough cash on hand to sustain the business for
two to three years - JPM
    ** But says it believes a resolution in the short to midterm
is unlikely and the event will force the company to restructure 
    ** As of last close, stock had fallen ~51.7% YTD

 (Reporting by Devik Jain in Bengaluru)
 ((Devik.Jain@thomsonreuters.com; within U.S. +1 646 223 8780;
outside U.S. +91 80 6182 2062; ;))