G4S became the second largest loser on the FTSE100 in mid-morning trading after analysts at Panmure Gordon downgraded the stock to 'Sell', from 'Hold'.
The G4S share price fell by over 2.5% to 229.20p and was only beaten by Centrica, as the worst performing stock on the index.
G4S and its rival Serco were officially stripped of their their electronic tagging contracts with the Ministry of Justice in December last year after it emerged taxpayers had been wrongfully charged for work that was not carried out.
The pair's rival, outsourcing giant Capita, has now taken over both contracts in the interim period before a new contract is awarded by the justice department in 2014.
Both G4S and Serco are still under criminal investigation by the Serious Fraud Office (SFO) over the tagging contracts scandal.
Details of overcharging only emerged after Justice secretary Chris Grayling made public allegations against the two outsourcing and security firms in July. Both had charged taxpayers for work not done, including the tagging of criminals who were dead.
The SFO's criminal investigation came days after the resignations of Serco Chief Executive Christopher Hyman and the G4S UK Chief Executive Richard Morris, who had previously been managing director of electronic monitoring at G4S Care & Justice Services.
Both Serco and G4S said in separate statements that they will co-operate fully with the investigations.
An internal review by G4S found it had overcharged the government by £24.1m (€29m, $40m) for incorrect billings between 2005 and 2013. The review, carried out by law firm Linklaters, found no "evidence of dishonesty or criminal conduct by any employee of G4S"