ABN marked down its valuation of Fisher and Paykel Appliances to 51c a share from the previous target of $1.57.
Forsyth Barr nearly halved its valuation of the company to $1.20 a share from $2.18.
Shares were trading slightly up yesterday after speculation the Government might step in as a lender of last resort for the company, which has downgraded its full-year profit to between $25 million and $30 million.
Fisher and Paykel Appliances also outlined a sharp fall in trading in the nine months ended January, with 2009 debt projected to reach $570 million, around twice the level of 2008.
ABN broker Chris Timms said the rise in debt reflected a substantial build-up in inventory globally and the fall in the value of the New Zealand dollar.
Management was confident that represented a temporary spike and had indicated a substantial reduction in net debt next year through about $95 million of asset sales.
Nevertheless, an equity raising was planned, he said.
"Trading conditions remain weak, with limited visibility available even to manage-ment. Risks to earnings appear to be on the down side.
"In addition, debt reduction is contingent upon asset sales in a difficult environment."
Terms for an equity raising were currently unknown, albeit the timing was clearly far from ideal, Mr Timms said.
Such limited predictability and the risks implied were likely to continue to be priced into the stock in the near term.
Forsyth Barr broker Tony Conroy said his downgrade highlighted how prospects for the second half of the financial year had deteriorated for Fisher and Paykel Appliances, which faced the "perfect storm" of sharp falls in demand and high raw materials costs.
Year-to-date revenue was down 13% in New Zealand and the US, 19% in Europe and 8.5% in Australia.
That implied "massive" second-half sales falls of 18% to 20% in New Zealand, Australia and the US and closer to 30% in Europe.
While moving manufacturing to Asia and Mexico would help Fisher and Paykel Appliances remain price-competitive, and raw material costs had fallen, the company faced sharply falling demand in its major markets and intense competition for sales.
"We have again reduced our forecasts and increased projected debt levels. Earnings predictability is clearly low and the extent of any dilution from an equity raising is unclear."
Fisher and Paykel Appliances shares bounced back yesterday to close at 72c, up 7c, with 3.86 million shares traded.
Messrs Timms and Conroy agreed some of the improvement was because of perception the shares had been oversold.
