Spartan Motors shares plunge on Army contract news

Shares of vehicle chassis maker Spartan Motors Inc. plummeted nearly 30 percent Wednesday, a day after two of its customers lost out on a $1.06 billion Pentagon contract to build 2,244 all-terrain vehicles for U.S. Army forces in Afghanistan.

Spartan had been expected to provide subcontracting work for BAE Systems or Force Dynamics, a joint venture between Force Protection Inc. and General Dynamics Corp., if either of those firms won the contract.

But when the Army awarded the deal to Oshkosh Corp., Spartan was essentially left out the mix, said Joe Maxa, an analyst with Dougherty & Co. LLC.

"There was certainly high expectations that Spartan would be involved," he said in an interview with The Associated Press. "They were well positioned to participate, but it just didn't turn out that way."

Maxa lowered his rating to "Neutral" from "Buy" and reduced his price target to $6.50 from $9.

Spartan officials did not immediately respond to requests for comment.

If its customers had won the deal, Spartan would have provided "auto integration" work, which means assembling the engine, transmission, axles and other parts to make the Army vehicles drivable, said Frank Magdlen, an analyst with The Robins Group.

"They had a significant part of the contract if it was won by either BAE or Force Dynamics," he said in an interview with the AP. "It would have been a meaningful part of their business."

Shares of Spartan, based in Charlotte, Mich., fell $3.21, or 28.33 percent, to $8.12 in afternoon trading Wednesday.