Ahead Of The Bell: Navistar Protest
HARTFORD, Conn. (AP) ¿ Navistar International Corp.'s protest over a contract evaluation process suggests that it is unlikely the company will win a $3 billion military pact, an analyst said Friday as he downgraded the stock.
Navistar Defense LLC, a part of Navistar International Corp. of Warrenville, Ill., said Thursday it is "in discussions" with the government over a technicality in the evaluation of the Mine Resistant Ambush Protected All Terrain Vehicle program. The company was not specific about the issues being discussed.
Analyst Jerry Revich of Goldman Sachs downgraded the Warrenville, Ill., company to "Neutral" from "Buy" and cut his profit estimate for this year to $2.40 per share from $4.50 per share. For 2010, Revich slashed his estimate to $2.25 per share from $6.60 per share and for 2011, he cut his estimate to $5.25 per share from $7.60.
Revich said in a note to investors that Navistar's protest suggests it is unlikely to win the contract because of the "urgent nature" of the program. It will more likely win a share of the work, he said."We believe that Navistar offers the US military a compelling value proposition driven by its strong manufacturing capability and low cost structure, although the M-ATV dispute suggests its engineering performance on this contract didn't meet the military's expectations," Revich said.
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