In early 2006, the Bausch & Lomb Company halted shipments of its ReNu contact lens product and recalled from retailers any unsold containers of its contact lens solution. The contact lens cleaning solution had been linked to an increasing number of serious eye infections caused by a fungus. ReNu products generated about \($45\) million in 2005 sales for Bausch & Lomb, but analysts predicted a wider decline in sales in related products as well. For 2006, equity analysts predicted that the company might lose \($75\) million to \($100\) million in lens-solution sales, or about 4.6 percent of the firm’s total projected sales for 2006. Shares of Bausch & Lomb declined over \($8\) per share, or 15 percent, in response to the product recall.

Discuss the relationship between revenue forecasts and security prices. Did the capital market overreact to the Bausch & Lomb news about ReNu?