Navistar Withdraws Military Truck Protest; Stock Soars
09 Abril 2009 - 5:40PM
Noticias Dow Jones
Navistar International Corp.'s (NAV) stock climbed to a
six-month high Thursday on news the truck maker had withdrawn its
protest over the U.S. government's selection process for a new
military truck.
Navistar closed at $36.73 a share, gaining $5, or 15.8%. It was
the highest close for the company since Oct. 3, when the stock
ended at $41.43.
With sales of Navistar's commercial trucks mired in a prolonged
slump because of falling freight volumes, investors have
increasingly focused on military trucks as a driver for revenue and
income. Navistar has forecast more than $2 billion in military
sales this year.
The Pentagon is expected to order at least 2,000 of the new
all-terrain trucks for U.S. troops in Afghanistan. The production
contract is estimated to be worth from $500 million to $3 billion.
The truck is intended to be a lighter, more mobile version of the
military's heavily armored Mine Resistant Ambush Protected truck,
or MRAP.
Illinois-based Navistar said it remains in the competition for
the contract after resolving an unidentified technical issue in the
requirements from the U.S. Government Accountability Office.
"We have worked with the government regarding this technicality,
and we have withdrawn our protest," said Elissa Koc, a spokeswoman
for the company's military arm, Navistar Defense LLC.
The company filed the protest with the GAO on March 30,
prompting widespread speculation that Navistar's entry had failed
in testing. The company's stock price fell nearly 14% on April
2.
Goldman Sachs analyst Jerry Revich lowered his rating on the
stock to "neutral" from "buy," after concluding Navistar was
unlikely to prevail in the protest or win the production
contract.
Navistar maintained the protest was primarily a formality and
the issue involved was minor. Koc said the government has amended
the requirements in its proposal for the truck.
Other companies competing for the contract include Oshkosh Corp.
(OSK), BAE Systems PLC (BAESY) and Force Protection Inc. (FRPT).
Navistar had been considered one of the favorites to win the
contract after building 10,000 or so of the heavier MRAP trucks
since 2007.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com