Harris Corp.'s shares fell in trading Monday after a Lazard Capital Markets analyst downgraded his rating on the communication and information technology company's stock, citing worries about weaker revenue.
THE SPARK: Analyst Michael Lewis cut his rating on Harris to "Sell" from "Neutral" and set a $41 price target on the shares, which means he thinks the stock will fall 16 percent from Friday's closing price.
THE BIG PICTURE: Harris works with government and commercial clients but relies heavily on federal funding.
The company, like many that derive their revenue from the government, is facing an uncertain future due to recent cutbacks and slashed government spending next year unless Congress can compromise on a budget.
Harris' leadership has tried to pick up more corporate clients while maintaining its defense work, but Lewis thinks the company still faces a potential revenue decline from federal business in the short-term as it makes the transition.
THE ANALYSIS: Lewis lowered his 2013 earnings and revenue estimates to below the average estimate of analysts polled by FactSet. He expects that investors will sell shares after Harris reports results for its fiscal first quarter, which ended in September.
An email sent to Harris requesting comment was not immediately returned.
SHARE ACTION: Shares fell $1.92, or 3.9 percent, to $46.92 Monday afternoon. The company's stock peaked at a 12-month high of $52.23 in the first week of October. Shares are still up about 30 percent this year.