Archer Daniels Midland (ADM) plunges after placing CFO on leave amid probe

Archer-Daniels-Midland Company (NYSE: ADM) shares plunged in early New York trading on Monday after an outside counsel and the Board’s audit committee launched investigation for accounting practices in the company’s Nutrition segment and related intersegment transactions.

This probe was initiated following a voluntary document request from the SEC. As a result, the company's CFO, Vikram Luther, has been placed on administrative leave amid the investigation.

ADM stock fell 14.2% in early Monday trade.

Ismael Roig has been appointed as interim CFO, leveraging his two-decade leadership experience at ADM.

Moreover, the investigation has led to a delayed release of Q4 earnings, which has been preannounced as weaker than expected.

ADM now anticipates full-year 2023 EPS to exceed $6.90, a decrease from the previous estimate of $7.00 and below the consensus estimate of $7.29.

“We believe each of these will be an overhang on the stock at least and possibly present downside risk,” Baird analyst Ben Kallo said in a note.

Kallo downgraded ADM stock to Neutral as he sees risk to estimates. Similarly, Goldman Sachs analyst Adam Samuelson also lowered the rating.

“With cyclical indicators, namely soybean crush margins, in upstream Ag Services & Oilseeds moderating over the past 1-2 months, core business fundamentals apart from Nutrition are also softer than our prior outlook, which combined suggests a move to the side lines is appropriate at this juncture,” the analyst said.

By Senad Karaahmetovic

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