Contracting firm Downer EDI gradually sees the recovery of the market values it lost last week when it admitted last week that cost blowouts of the Waratah train project in New South Wales forced it to absorb losses of up to $250 million.

Immediately following its confession that the giant RailCorp project overwhelmed its overly aggressive timetable, Downer saw its stocks plummeting by 20 percent on Thursday last week but its shares gained two percent when market opened up on Monday.

Notwithstanding, analysts said that it would take a while before the engineering company recovers from its bruises as Commonwealth Bank analyst Ben Brownette told AAP that the damage has been done and Downer will have to work harder to restore its management credibility issue.

Brownette rightly characterised Downer's current position as standing in a hapless position where "it has neither the expertise nor experience necessary to execute a contract as large or as complex as the Waratah project."

The Commonwealth Bank analyst said that that Downer's admission of a setback that involves a very important undertaking is simply astonishing and flagging more delivery delays of trains did not help the company's case.

Downer said that train deliveries will have to wait until April of May as more skilled workers will have to be recruited to finally wrap up the Waratah train project.

A natural question coming from investors, according to Brownette, is why the talent void was not dealt with in the first place, which could have prevented the unnecessary delays.

Despite the present challenges, Downer is upbeat that its underlying business stands on a solid ground and amply supported by up to $7 billion new contracts all lined up for the first half of 2010/11.

Yet behind that optimism, Downer could not hide the glaring figures that point to a decline as the company conceded that the first half figures would not be too rosy, with its earnings before interest and tax poised to register only $132 million, coming from the $140 million achieved from the same period in 2009.

To buttress its position, Brownette is not discounting the possibility of equity raising for Downer but he reminded that "the board and senior management should be courting investors with a view of realising the underlying value in the rest of the business."

The CBA analyst may be alluding to a recent decision by Fitch to downgrade Downer's stock attraction, leaving Brownette to conclude that "we view this stock as un-investable given management credibility, high gearing, prospect of downgrade, further contract losses, and overall lack of transparency."