Quality QuestionsThe shift in the focus of Greene's attention on this stock helps to tell the tale of the frantic action in aaiPharma. The first time Green cut his rating -- to buy from strong buy -- he talked about an overheated stock price. The second time, though, he worried about the quality of sales and earnings, in part echoing comments made by bears on the stock. Greene warned clients last Thursday about that growing uncertainty, and the market took notice. His fears rippled through the market on the day aaiPharma's stock sank by 23%. Greene's source of worry is the company's inventory and its decision to set aside a $15.9 million reserve to account for products that are returned. "This reserve is likely to further fuel speculation regarding the quality of sales and earnings," Green wrote last Thursday. "We are moving to the sidelines and prefer to wait for the dust to settle." He doesn't own shares; his firm is a market-maker in aaiPharma's stock.
|Not Seeing Eye to Eye |
Analysts' divergent earnings estimates on aaiPharma
|Analysts' reports and Thomson First Call|