Thursday January 15, 05:00 PM
UPDATE 1-RESEARCH ALERT-Collins Stewart cuts Force Protection
(Adds details, background, share movement)
Jan 15 (Reuters) - Collins Stewart (LSE: CLST.L - news) downgraded Force Protection
Inc (NASDAQ: FRPT - news) to 'hold' from 'buy,' citing valuation and competition, and shares of the company fell as much as 20 percent.
The brokerage, which removed its price target on the stock, said the company's shares have risen sharply due to the positive sentiment surrounding its MATV or Multipurpose All-Terrain Vehicle bids.
'While this is certainly a potential source of upside, we continue to believe Navistar is the vendor to beat,' the brokerage said, adding that Force Protection's stock is 'ahead of itself' as it trades on expectations of a win.
Force Protection is in the race to build a lighter version of the Mine-Resistant Ambush Protected (MRAP) vehicles that were sent to troops in Iraq.
The competition allows multiple proposals from each bidder and Force Protection has bid an enhanced version of its Cougar vehicle, while submitting the Cheetah vehicle through a joint venture with General Dynamics, Collins said.
Rival truck and engine maker Navistar International Corp also supplies MRAPs to the U.S. military under multiple variants of the MaxxPro brand.
'Funneling the Cheetah proposal through the JV will improve its odds of winning, but the odds still favor Navistar, in our opinion,' the brokerage said.
On Thursday, the U.S. Army awarded a unit of Navistar nearly $79 million to provide 605 vehicles for Operation Iraqi Freedom.
Other MRAP contractors include BAE Systems (LSE: AP16.L - news) , Oshkosh Truck Corp and closely held Protected Vehicles Inc of South Carolina.
Shares of Force Protection fell to a low of $5.20 before paring some losses to trade down 16 percent at $5.45 Thursday morning on Nasdaq (NASDAQ: news) . The stock has more than doubled in value over the past six months.
(Reporting by Eric Yep in Bangalore; Editing by Deepak Kannan) Keywords: FORCEPROTECTION/RESEARCH COLLINS
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