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What: A123 Systems
So what: Morgan Stanley cited three catalysts it believes could drive the stock higher in the next six months: revenue could increase markedly in 2011 as several customers move to volume purchases, higher utilization could boost margins, and the company could announce details of a production contract with a major U.S. carmaker for 2013.
Now what: Last week the stock was downgraded by Pacific Crest Securities and lost 22%. Consensus forecasts are calling for losses through at least 2012, and Pacific Crest believes losses will force the company to raise additional money through a secondary offering by early 2013. With no profits in sight for at least a couple of years, the stock is likely to continue being driven by electric vehicle sentiment and revenue-related news.
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Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.