Piper Jaffray Cuts Impac Medical to Underperform

Analyst Ryan Stewart says the auditor's resignation, and delayed earnings, could be crippling in the near term

Piper Jaffray downgraded Impac Medical Systems (IMPC ) to underperform.

Analyst Ryan Stewart says he downgraded the medical record and billing company from market perform as the resignation of auditor Deloitte & Touche serves as a major blow. He believes, aside from delayed earnings, Deloitte's departure could be crippling in the near term, and he sees a potential Nasdaq delisting.

Stewart says the news comes on top of other big negative factors, including a highly conservative revenue-recognition policy, increased competition from linear accelerator players, and industry reimbursement concerns. He cuts the $15 price target to $8. Stewart sees 7 cents third-quarter earnings per share, 6 cents in the fourth quarter, 25 cents in fiscal 2004 (Sep.), and 55 cents in fiscal 2005.

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