Downgrade Dents Force Protection

An explosive analyst report hit Force Protection's (FRPT) stock Tuesday.

Veering sharply away from the dominant bullish crowd, Stephens analyst Tim Quillin this week began urging investors to sell Force Protection's stock, saying he sees a likely plunge in earnings. Quillin sees Force Protection losing market share and producing thin margins in a business that will soon start to shrink.

Currently, Force Protection ranks as a leading supplier of Mine-Resistant Ambush-Protected vehicles for the global war on terror. But the company has lost some ground to larger players in recent quarters and, Quillin feels, could wind up with less than 25% of the MRAP market before demand for its vehicles wanes -- as the Iraq war winds down -- in a couple of years.

"We would sell/short shares of Force Protection, as we believe it is priced for a near best-case scenario," writes Quillin, whose firm hopes to secure investment banking business from the company in the future. Thus, "we are initiating coverage with an underweight/volatile rating and a 12-month price target of $14" a share.

The stock, while down 3% to $22 following Quillin's report, has not seen a price that low so far this year. Indeed, it fetched more than twice that much -- peaking above $30 a share -- just four months ago.