UPDATE: DA Davidson Downgrades Herbalife to Neutral After KPMG Resignation

In a report published by DA Davidson, analyst Timothy S. Ramey downgraded Herbalife

from Buy to Neutral and lowered the price target from $78.00 to $38.00. In the report, DA Davidson wrote, "In light of today's announcement that Herbalife's former auditor KPMG has resigned and withdrawn its audit reports on Herbalife's financial statements for 2010, 2011 and 2012, we are downgrading the shares to NEUTRAL from Buy and lowering our price target to $38, previously $78. Our price target is 8x our FY13 estimate $4.75. There is no reason to feel differently about Herbalife, its prospects, its historic performance, or our outlook. Our EPS estimates are unchanged. Yet as a stock, it will be a serious problem to be out of compliance (through no fault of their own) with NYSE requirements; and potentially breach their loan covenants. We are reducing our long-term target to $90, previously $180 which encapsulates our view that there is heightened risk and volatility near-term, but excellent value in the longer term." Shares of Herbalife are currently down 3.07 percent from market open Tuesday morning, trading at $37.21.