Force Protection shares sink on loss of Army deal

Shares of Force Protection Inc. declined Wednesday, a day after losing a multibillion-dollar U.S. Army contract to build new off-road terrain vehicles to outfit ground forces in Afghanistan.

In midday trading, the company's stock plummeted $3.37, or 38 percent, to $5.46, after hitting an intraday low of $5.22. Shares of Force Protection, based in Ladson, S.C., have traded between $1.70 and $10.03 over the past 52 weeks.

Late Tuesday, the Pentagon announced vehicle maker Oshkosh Corp. won the $1.06 billion Army deal to build 2,244 vehicles, beating out three other competitors. Among those were BAE Systems, the U.S. subsidiary of British defense conglomerate BAE Systems PLC; Navistar International Corp.; and Force Dynamics, a joint venture between Force Protection Inc. and General Dynamics Corp.

The military has said it needs a hybrid armored vehicle to provide the same type of protection as mine-resistant, ambush-protected vehicles that have been used in Iraq but it must be lighter, more agile and provide increased maneuverability to handle Afghanistan's rocky terrain.

The Defense Department has previously said it could buy between 2,080 and 10,000 of the so-called MRAP-All Terrain Vehicles for use by the Army and Marine Corps.

Collins Stewart analyst James McIlree downgraded Force Protection's shares to "Hold" and removed his $10 price target.

"With MRAP-ATV now removed from the company's bucket of opportunities, we believe there is little else in the way of catalysts," McIlree wrote in a note to clients.