UPDATE: Jefferies Downgrades ArthroCare to Hold

Jefferies lowers its rating on ArthroCare

to Hold from Buy and cuts its price target by $7 to $25 due to unexpected DOJ investigation that raises uncertainty on shares. Jefferies says, "Our thesis on ARTC has been partially based on the eventual acquisition of the company. However, because of a new and entirely unexpected DOJ civil investigation, this outcome is not likely anytime soon. Given the underlying performance of the business, the valuation at current levels is unsupportable without the premium a potential acquisition provides." ARTC closed at $30.77 a share on Thursday.