Shares in Elan slumped 10 per cent on the Irish Stock Exchange this morning following the release of its annual report which revealed the company expects to take a "significant" impairment charge on its second quarter results.
Although Elan did not give an exact figure for the charge, it noted that a 20-30 per cent reduction in the carrying value of its investment portfolio compared to December 31st would result in a non-cash charge of $630.6 million.
One analyst, from a leading London-based brokerage, said that while this was clearly weighing on shares today, such a charge is not unexpected.
"The business has not been performing very well and obviously we will see impairment charges as a result," he said, adding that the news just compounds the negative sentiment surrounding the stock.
Another analyst, who declined to be named, highlighted concerns over the improved transparency of Elan's risk-sharing revenues, revealed in the report today. He said he expected the shares to get a "hammering" on the back of this in the US later today but declined to expand further.
However, both Davy Stockbrokers and Goodbody Stockbrokers were less concerned by the report. They said at first glance - the report is 158 pages long - the headline results have not been restated in any material way.
Davys said that in light of the accounting uncertainty within the stockmarkets at present this should be viewed positively.
Additional reporting AFP