ADMA stock rocketed Friday after the biotech company inked a deal with KPMG, which has signed on as its new independent registered public accounting firm.
The news helped reverse a 16.3% dive on Oct. 10 when ADMA Biologics unexpectedly said its previous accounting firm, CohnReznick LLP, would resign after filing the report for its quarter ended Sept. 30. Now, KPMG will take over, effective following the final filing from CohnReznick.
Mizuho Securities analyst Anthony Petrone noted the "speed of signing a new audit agreement with a 'top four' accounting firm that has a high exposure to Fortune 500 companies."
ADMA stock launched 18.8% to 19.37, wiping out the previous loss when CohnReznick handed in its resignation.
ADMA Stock: No Restatements Needed
ADMA Biologics manufactures human-derived immunoglobulin products for people whose bodies don't make enough antibodies to ward off illnesses like respiratory syncytial virus, or RSV. Shares were on a run this year, rising out of dollar-stock status, until the CohnReznick news.
But Mizuho's Petrone emphasized ADMA's previous financial filings don't require any restatements and its internal financial controls are sound.
"The speed and quality of the newly signed audit agreement essentially put to bed any concerns regarding the company's prior financial statements and go-forward reporting standards," he said in a report. "We expect the de-risk event to drive a sharp upward re-rate in the shares."
Petrone has a buy rating and a 20 price target on ADMA stock.
ADMA Biologics will report its third-quarter earnings after the stock market closes on Nov. 7. The Street projects adjusted earnings of 13 cents per share and $106 million in sales. Earnings would soar 120% year over year, while sales jump nearly 58%.
Despite the CohnReznick debacle, ADMA stock still has best-possible Composite and Relative Strength ratings of 99. This means shares outrank 99% of all stocks, regardless of industry group, in terms of fundamental and technical strength and 12-month performance, according to IBD Digital.
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