April 3 (Reuters) - Goldman Sachs said Navistar International Corp NAV.N was unlikely to win the $3 billion-plus MRAP All-Terrain Vehicle (M-ATV) contract and downgraded the stock to "neutral" from "buy."
On Thursday, Navistar, which is competing to supply the next generation of mine-resistant ambush-protected vehicles to the U.S. military, filed a complaint with the Pentagon over the evaluation process, suggesting its bid might be in trouble. [ID:N02257973]
“A share of the M-ATV contract now appears to be the best case scenario, but Navistar is unlikely to win the protest given the urgent nature of the program,” Goldman said. It removed Navistar from its Americas buy list.
Goldman, which also cut its price target on the stock to $26 from $38, said the M-ATV dispute suggests Navistar’s engineering performance on this contract did not meet military’s expectations.
Separately, Collins Stewart noted that “in a typical government bid, contractors may file a formal protest only after government action has been taken.”
“Should Navistar be ousted from the M-ATV competition, this would be hugely positive for Force Protection,” it said.
Navistar shares closed down 14 percent at $29.21 Thursday on the New York Stock Exchange. (Reporting by A.Ananthalakshmi in Bangalore; Editing by Himani Sarkar)
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