NeuStar falls as pact renewal may be in jeopardy

NEW YORK (AP) -- Shares of NeuStar slid Thursday after an analyst cut the company's rating and price target, saying it may possibly lose a large contract.

Late Wednesday, NeuStar Inc. said that it was informed by North American Portability Management LLC that its revised bid for the local number portability administrator contract starting on July 1, 2015 will not be considered. NeuStar had submitted the revised proposal in October. Its initial bid was in April.

Neustar has served as the administrator for the number portability administration center for the U.S. and Canada since 1996. Number portability enables users to keep their telephone numbers when switching from one carrier to another.

Neustar, based in Sterling, Va., offers communications clearinghouse services to communications companies and Internet service providers. It operates databases of area codes and phone numbers that telephone companies tap into to route calls. It also plays an important role in routing Internet communications.

Baird analyst William Power downgraded NeuStar to "Neutral" from "Outperform" and reduced his price target on the stock to $36 from $58. In a client note, the analyst said that the response by NAPM appears to suggest that there's more risk to NeuStar's bid being successful, but he said it's also not clear that any decision has actually been made.

Power said that he believes NeuStar will continue to try for additional bids and may consider legal challenges if it doesn't win the contract.

Shares of NeuStar tumbled $8.65, or 20 percent, to $35.10 in afternoon trading. The stock dropped to $33.19 earlier in the session, its lowest point since July 2012.