$8 target

Deutsche Bank retains a "buy" on valuation of Slater and Gordon with a target price of $8 a share. "Although the headlines read negatively, we view the release of Quindell's restated historical accounts as largely immaterial for SGH considering: (1) SGH did not rely on Quindell's accounting policies during the PSD due diligence process (instead SGH and Ernst & Young LLP applied fundamental, bottom-up analysis including the review of 8000 case files by 70 lawyers); (2) Quindell elected to restate its accounts effectively using cash accounting policies which are not standard PI industry practice (perhaps motivated by potential tax and gain on sale benefits); (3) the adoption of cash accounting was not recommended nor enforced by the regulator, reducing the risk of SGH being forced to adopt such policies; and (4) PSD is now focused on higher velocity, cash generative fast track RTA cases rather than growing the cash consuming Noise Induced Hearing Loss (NIHL) claims. The key near-term catalyst for SGH remains gaining a clean bill of health from ASIC."