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Sino-Forest Corp. faces an uphill battle restoring investor confidence, which could endanger access to capital that it needs to deliver growth, Raymond James analyst Daryl Swetlishoff said.

"We do not place undue emphasis on Muddy Waters' findings," Mr. Swetlishoff said, referring to the research firm that short-sold Sino-Forest stock and published allegations of fraud against the forestry company.

Sino-Forest denies the allegations. Its stock has lost almost three-quarters of its value since Thursday.

"Friday's extreme share price reaction appears overdone in our view, however, we advise caution as we do not expect Sino to be able to quickly restore investor confidence and note that the company remains vulnerable to any potential irregularity as its Chinese operations come under the microscope," Mr. Swetlishoff wrote in a research note.

He said the negative reaction indicated that the report tapped into underlying investor uncertainty associated with Sino-Forest's Chinese operations.

Citing "this crisis in confidence by capital providers," he placed Sino-Forest's "strong buy" rating under review, pending an internal review by the company's independent directors.