Force Protection plunges on possible Army cut and "sell" rating
Force Protection, Inc. (Nasdaq: FRPT) shares are plummeting after investment bank Stanford Group initiated coverage on the maker of armored vehicles with a “sell” rating and a $5 target.
In a note to investors, Stanford said Force Protection will struggle growing after 2008 after concentrating highly in Mine Resistant Ambush Protected (MRAP) vehicles. Stanford said MRAP demand is likely lower than anticipated and will peak in 2008.
Millward said in an interview that the longevity and the pipeline length of the MRAP program after 2008 are problems for the company.
The Army is also possibly cutting its MRAP program, she said. On Monday, the Army said it might not need all the armored vehicles it requested. The Marines already cut its MRAP program in late November.
Milward expects that Force Protection will be “unlikely” to meet consensus earnings and revenue estimates for 2008 due to “overly optimistic” guidance. Analysts, on average, expect 2008 earnings of $1.45 per share on $1.36 billion revenue.
In afternoon trading, FRPT shares are down 26.54%, or $1.81, at $5.01. Over the last 52 weeks, shares have ranged from $4.92 to $31.16.
