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On Thursday, Piper Sandler analysts reaffirmed their Overweight rating and $12.00 price target on Abacus Life Inc. (NASDAQ:ABL). This decision comes after a short report caused the company’s shares to drop by over 20%, contributing to a significant 22% decline over the past week. According to InvestingPro data, the stock’s RSI suggests it’s currently in oversold territory.
The short report, released earlier in the day, alleged that Abacus Life has been underestimating life spans in its life expectancy valuations. This practice, according to the report, leads to higher valuations on life settlement policies originated by the company. Additionally, the report criticized Abacus Life’s accounting methodology, highlighting significant unrealized non-cash gains. Despite these concerns, InvestingPro analysis indicates the company maintains a robust gross profit margin of 88.29% and achieved impressive revenue growth of 73.39% in the last twelve months.
Piper Sandler analysts noted that life expectancy valuations are inherently complex and challenging to verify. They pointed out that Abacus Life employs proprietary technology and collaborates with multiple third parties, including Lapetus, to assess these valuations.
The analysts also highlighted that Abacus Life’s shares are traded by sophisticated investors who conduct their own due diligence on life expectancy data. They emphasized that the company’s accounting practices, involving unrealized gains before finalizing sales, are well-known to investors and should not be unexpected.
In other recent news, Abacus Global Management reported a significant surge in its first-quarter revenue for 2025, more than doubling to $44.1 million compared to the previous year. The company also saw a substantial increase in adjusted net income, up 158% year-over-year, highlighting its strong financial performance. In response to a short seller report by Morpheus Research, which questioned the company’s asset valuation practices, Abacus Global Management refuted the allegations, emphasizing its audited returns and longstanding industry relationships. The company plans to release a detailed rebuttal and pursue legal action against the claims.
Additionally, Abacus Global Management announced adjustments to executive compensation, with salary increases for key officers and the introduction of performance-based restricted stock units tied to financial targets. The company’s Compensation Committee aims to align executive incentives with performance and market standards. Furthermore, Abacus Global Management disclosed that its expanded private fund offerings have attracted significant capital inflows, totaling $123 million in just one month.
The company’s recent public offering and association with high-profile names, such as Terry Pegula, have added to its visibility. However, the impact of the short seller’s report has raised questions about its business model. Despite these challenges, Abacus Global Management remains focused on its strategic initiatives, including potential mergers and acquisitions to strengthen its market position.
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