Bank of America analysts have released a scathing report on...

Bank of America analysts have released a scathing report on Slater & Gordon, following the law firm roll-up business's transformational purchase of troubled UK group Quindell's professional services division, or PSD.
"We now fundamentally believe the underlying quality of the business has been eroded with the PSD acquisition which will represent [an estimated] 58 per cent of group EBITDA in FY16," write the analysts, as they downgrade the stock to underperform from neutral.
The BoA team slash their share price target for Slater's to $6.56 from $8.16. The stock last fetched $7.57.
On the analysts' "forensic analysis", Slater & Gordon paid more than double what they should have for the PSD business: 637 million pounds against their estimated value of 265 million pounds.
They also are worried about Slater's Australian business, saying "underlying growth is challenged and free-cash flow [FCF] generation is weak". They also suggest that while acquisitions have boosted accounting earnings, that's not flowing into real cash generation.
"Results of our FCF analysis are concerning and suggest: (1) despite consistent growth in earnings per share, FCF per share returns have been volatile; (2) conversion has been weak; and (3) reported FCF seems partially reliant on acquisitions."