Analysts are largely unconvinced by allegations that Muddy Waters leveled at American Tower Corp (NYSE:AMT) in a report yesterday. The company’s track record of transparent management, the presence of major auditing firms, and sound financials have led many analysts to conclude that AMT is still a sound investment despite the Muddy Waters report.
Muddy Waters Says $250 Million Unaccounted For
Muddy Waters says that it has identified a discrepancy in the purchase of 666 Brazilian towers in 2011 and that $250 million out of $585 million remains unaccounted for and that the valuation was done by “a dodgy accounting firm.”
American Tower Counters With Transparency And Credibility
American Tower Corp (NYSE:AMT) countered that Muddy Waters was only looking at a portion of the entire deal. They say that the deal was structured as a $355 million inter-company loan, $184 million equity contribution, and an additional $66 million in cash from local operators. American Tower Corp (NYSE:AMT) says that it has received confirmation of payments for the entire amount from the seller in Brazil, and that it used internationally known KPMG to help finalize the deal. The company also points out that Deloitte & Touche has audited its books for the last three fiscal years.
Investment Firms Skeptical Of Muddy Claims
Evercore Partners notes that they have followed American Tower Corp (NYSE:AMT) for years and, “In our experience, the accounting has been conservative and the management transparent. Raymond James and Associates also believes AMT calling it “a sophisticated international tower company” working with “an internationally recognized accounting firm (one of the Big 4).”
Morgan Stanley (NYSE:MS) was more neutral on the topic stating simply, “We note the company issued an 8-K detailing their payments for the acquisition, and retained the services of an internationally recognized accounting firm.” It may be some time before the evidence firmly points one way or the other, but investment firms clearly haven’t been spooked by the allegations.
All three companies rate American Tower Corp (NYSE:AMT) stock highly, with Morgan Stanley (NYSE:MS) and Evercore both calling it Overweight in their most recent briefing, and Raymond James rating it as an outperforming stock. Analysts mention solid international growth and ‘unprecedented’ domestic activity within the tower industry as reasons to expect strong earnings. American Towers is set to release its second quarter earnings report on July 31.