NEW YORK (AP) -- Shares of Chiquita Brands are falling in morning trading on Wednesday after an analyst lowered his rating on the produce company due to declining banana prices.
THE SPARK: Jonathan Feeney of Janney Capital Market cut Chiquita Brands International Inc. to "Neutral" from "Buy," and trimmed his earnings expectations for this year and next.
THE ANALYSIS: In a client note, Feeney said that fruit prices have been dropping recently due to increased volume in Latin America and disruptions in Middle East markets because of the unrest in Syria.
The analyst said that European spot prices are down 11 percent from a year ago, having deteriorated since mid-August. Feeney said the spot price was up 10 percent to 20 percent for most of the summer, thanks to a stronger euro and balanced supply and demand.
"While some tempering of prices is always expected in the fall, these declines exceed the usual pattern," he wrote.
Feeney said that the pricing concerns are coming at a bad time, as the fall is when many annual fixed contracts are being negotiated with key North American retailers.
Still, the analyst said that it's" likely a temporary setback for banana fundamentals" and could be a good opportunity for long-term investors to buy the stock.
A representative for Chiquita did not immediately respond to an email seeking comment.
SHARE ACTION: Down $1.50, or 12 percent, to $11.10, with twice as many shares as a normal day already traded. The stock closed Tuesday up 57.5 percent since the start of the year.