Harris Corp. fell the most in more than a year after the maker of military radios lowered its sales forecast because of U.S. spending cuts.
The Melbourne, Florida-based company slid 4.4 percent to close at $47.09 in New York trading for the biggest one-day drop since Sept. 28, 2011. The shares are down 3.8 percent so far this year.
Harris’s revenue for the fiscal year ending June 30 is forecast to decline 2 percent to 4 percent from the prior year “due to expected slower government spending resulting from growing budget uncertainty,” the company said in a statement today. The company previously anticipated sales to remain unchanged or decline as much as 2 percent.
Harris beat analysts’ expectations for the second quarter ended Dec. 28. It announced adjusted profit of $1.25, compared with the $1.19-a-share average estimate of eight analysts surveyed by Bloomberg.
The company’s quarterly results were “solid in a very difficult and uncertain government spending environment,” Chief Executive Officer William Brown said in the statement.
About 70 percent of the company’s revenue in fiscal 2012 came from the U.S. government, according to a Securities and Exchange Commission filing.
Automatic budget cuts known as sequestration are set to take effect March 1 unless Congress and the White House work to stop them. They would trim about $45 billion from defense programs in the current fiscal year that ends Sept. 30.
The reductions would come on top of almost $500 billion in already-planned defense cuts over a decade.
Harris’s Pentagon customers are probably “reacting and slowing down purchasing,” Mark Jordan, a St. Louis-based analyst at Noble Financial Capital Markets, said in a telephone interview. “It’s impacting Harris.”
Jordan has a “buy” rating on the company.