NEW YORK (AP) — Shares of Heckmann Corp. fell Thursday after the drilling-services company was downgraded by Jefferies & Co., which cited slower activity in shale formations and lower prices for Heckmann's services.

THE SPARK: Jefferies dropped Heckmann shares to "Hold" from "Buy" and lowered its target price on the stock to $4.50 from $5.50.

Analyst Scott Graham also cut his forecast for 2013 earnings per share in half, to 9 cents. That's lower than most analysts expect. Those polled by FactSet predict 17 cents.

THE BIG PICTURE: Heckmann, which is based in Coraopolis, Pa., uses trucks to deliver water used in hydraulic fracturing, or fracking, and disposes of the used liquids.

Fracking involves drillers using water and chemicals under high pressure to crack open rock formations and release natural gas. The process has helped oil and gas companies boost gas production, which in turn has led to an oversupply of gas in the U.S. and weak prices.

THE ANALYSIS: Activity in the in shale formations where Heckmann operates "looks sluggish" into the first half of 2013 based on rig counts and other factors, Graham said in a note Thursday, and there's pressure on prices for Heckman's water services.

Graham's not the only one on Wall Street rethinking his position on Heckmann.

Wedbush Securities downgraded the company's shares to "Underperform" from "Neutral" a week ago, predicting that the company would cut its profit outlook for 2013.

SHARE ACTION: Down 18 cents, or 4.9 percent, to $3.50 in afternoon trading. The stock had dropped 31 percent in the past 12 months.