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Force Protection


has slammed back into reverse.

The defense contractor's stock slid more than 20% on Monday due to concerns about weak orders for the company's mine-resistant ambush-protected vehicles. That plunge erased two-thirds of the gains that the volatile stock racked up on Friday following

upbeat comments from the company's CEO.

Recently, some industry experts have started feeling uneasy about Force Protection's future prospects. Indeed, in a downgrade issued Monday, Friedman Billings Ramsey analyst Patrick McCarthy warned that the U.S. military could favor rivals




( NAVZ) over Force Protection when the government awards its final 2007 MRAP contracts later on this week.

McCarthy has slashed his expectations for the stock as a result. He now has an under-perform rating and a $3 price target -- down sharply from $25 earlier -- on the company's shares. His firm makes a market in the securities.

"During recent conversations with contacts on the

MRAP vehicle program, their body language has shifted, and we believe that more bad news could be on the way for Force Protection," McCarthy cautioned. "Although this is speculative, we estimate that the majority of this week's MRAP awards will go to only two companies and FRPT could potentially receive a smaller order than we had originally projected. Previously, we believed that FRPT might win as much as 40% -- or more -- of this award" instead.

In a nutshell, McCarthy explained, the rules of the MRAP game have changed.

Historically, McCarthy said, the military has focused primarily on production capabilities when awarding big MRAP contracts. Force Protection CEO Gordon McGilton highlighted this very metric in his bullish update on Friday, boasting that "no other contractor in

the industry develops vehicles faster" than does the company.

But going forward, McCarthy said, the military will likely shift its focus to "vehicle commonality and long-term logistics costs."

"We believe that more attention is now being paid to the long-term costs of maintaining the program because it is now winding down," McCarthy stated. "And we view this trend as incrementally negative for FRPT.

"Although only anecdotal evidence at this point, it leads us to believe that FRPT could have some additional bad news in store."

Stanford analyst Josephine Millward highlighted similar risks when initiating coverage of Force Protection with a sell recommendation late last week. At the time, Millward warned that Force Protection would likely field smaller orders than it currently expects. Still, even Millward assumed that at least one more decent order lay in store for the company.

She predicted that the U.S. would evenly divide this year's final MRAP order -- which is expected to total 3,000 vehicles -- between its three established suppliers. But after that, she cautioned, the military could start clearly favoring Force Protection's rivals BAE and Navistar.

Millward's firm makes a market in Force Protection's stock.

"The Army is interested in reducing its MRAP variants, and its existing fleet is mostly BAE and Navistar MRAP vehicles," Millward stressed on Friday. "Although we like

FRPT's vehicles, we remain concerned about the company's prospects on the upcoming MRAP awards and its long-term pipeline.

"We reiterate our sell rating and 12-month price target of $5" as a result, she said.

Following Monday's plunge, the stock is back near Millward's target at $5.39 a share. It hovers near the bottom of its wide 52-week range.