UPDATE: KeyBanc Capital Markets Downgrades ENGlobal Corporation to Hold on Weak Q2 Results

KeyBanc Capital Markets reduced its rating on ENGlobal Corporation ENG from Buy to Hold and removed its previous $3.50 a share price target. KeyBanc Capital Markets commented, "We are downgrading ENGlobal Corporation to HOLD (from BUY) following its weaker-than-expected 2Q12 results, which have dampened our near to medium-term earnings outlook and have put the firm in violation of covenants under its new credit facility, generating some concerns around ENG's near-term liquidity. This follows several quarters of disappointing performance from ENG and adds to a series of events that have contributed to the uncertainty around the firm's direction, including recent credit issues that we believe impacted competitiveness in 1H12, the abrupt June 13 departure of its CFO, and the unexpected August 1 departure of two-year CEO Edd Pagano, who was replaced by co-founder, Chairman and former CEO Bill Coskey. ENGlobal Corporation closed at $1.10 on Monday.