CA - Ritchie Bros dips after BofA downgrades following IAA deal news

Ritchie Bros. ( NYSE: RBA ) ticked down 1.7% after it was cut to neutral from buy at BofA as the planned purchase of IAA Inc ( NYSE: IAA ) likely adds "uncertainty to a story that was rather straight forward." The shares plunged 18% on Monday.

BofA analyst Michael Feniger cut Ritchie Bros. ( RBA ) price target to $55 from $74 in a report that that includes the title "Straight forward story thrown a massive curve ball."

The IAA ( IAA ) deal is likely to raise several issues including leverage, it's outside Ritchie's core competency, strategic overlap, integration and competitive dynamics, according to Feniger.

Feniger isn't the first analyst to question the announced $7.3 billion cash and stock deal. On Monday William Blair analyst Lawrence De Maria called the transaction a "head-scratcher."

"Our initial take is that the deal is a head-scratcher in its timing, strategic rationale, and valuation, which clearly is catching the Street and us by surprise," De Maria wrote in a note.

The IAA sale announcement comes after activist investor Ancora Holdings in March called for IAA ( IAA ) to either put itself up for sale or replace its CEO.

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