ATA, which gets 80% of its revenue from Dyson, reiterated on Monday that it took the accusations seriously and that findings from a labour audit were inconclusive. It also warned of revenue decline and cost cuts.
The firm, which makes parts for Dyson's vacuum cleaners and air purifiers, faces high operational risks in the short term and will be challenged to find new customers to replace Dyson, AmInvestment Bank said.
"ATA may not be in the most favourable position to negotiate with potential new customers," it said in a research note.
"Hence, we believe ATA's recovery from the current crisis will be bumpy, exacerbated by the labour shortage crisis."
ATA said this month it was unable to recruit foreign workers because of coronavirus curbs.
Its shares fell as much as 27% on Tuesday, before paring some losses to end the day down 13.5%. It has lost nearly two-thirds of its value since the Dyson termination.
Two other ATA customers are monitoring the accusations, they told Reuters.
Ecobee, a maker of Wi-Fi-enabled thermostats, said it was recently made aware of the accusations and was reviewing the information to decide its next steps.
Cricut, which makes electronic crafting machines, said it took the accusations seriously and was monitoring the issue to determine further action.
France's Sagemcom, which makes communications devices, signed up as an ATA customer late in 2019, but said it cut ties with the Malaysian firm this year, "given the supplier's shortcomings and its inability to meet our standards".
It did not say what standards ATA fell short of.
French electrical equipment group Schneider Electric said its due diligence on an ATA subsidiary it sources from had not raised any issues warranting further investigation. The French firm said it would continue to monitor the situation.
ATA did not immediately respond to a request for comment.
(Reporting by A. Ananthalakshmi; Editing by Clarence Fernandez and Edmund Blair)
By A. Ananthalakshmi and Liz Lee