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.

He said Navistar's protest is positive for Oshkosh Corp., Force Protection Inc. and General Dynamics Corp.

The contractor's protest could jeopardize delay the start of the program and put pressure on other government contractors, according to another analyst.

Analyst James McIlree of Collins Stewart LLC said in a note to investors that Navistar's protest could delay the start of the military all-terrain vehicle program. That would pressure companies such as Axsys Technologies Inc., FLIR Systems Inc., Harris Corp. and other contractors that provide government equipment, he said.

The U.S. Army is seeking contractors to supply military all-terrain vehicles for Afghanistan, McIlree said. The Army could start with 2,000 vehicles, but because President Barack Obama has ordered more troops, the number of vehicles needed in Afghanistan could rise, he said.

However, McIlree said Navistar's protest could delay the process another quarter, slowing procurement and hurting vendors. Delays would be seen as "incrementally negative by this skittish market," he said.

Shares of Navistar closed at $29.21 Thursday, down $4.62, or about 14 percent from its close Wednesday. The shares fell 23 cents to $28.98 in Friday premarket trading.

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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