Original post:
As a follow-up to "Earnings Heads up: A123 Systems Reports Today (AONE)" a reader emails this, from Dealscape:
...A research report from Pacific Crest Securities, highlighted in Barron's Stockpickr, sums up the opportunities and challenges investors face with A123Systems.See also the Green Light blog "Fiat and Chrysler Pull Back on Electric Cars; Bad News for A123 Systems?"
It is solidly positioned for hypergrowth in electrified drivetrains. Based on our discounted-cash-flow and comparable-company valuation analysis, we believe shares of AONE are fairly valued at approximately 19. That said, given the lack of pure-play comparables, and uncertainty regarding future cash flows, the shares are likely to trade based on sentiment drivers like design-win activity and customer-road-map data points.
While AONE has appreciated significantly above the initial offering price, we think further upside potential exists, although the current risk/reward trade-off is balanced, [with share moves that are] event-driven and volatile in the near term. Disruptions to key customer road maps, such as Chrysler's, could drastically change our ... valuations. [Yet] we believe that about $5 a share in cash (with additional $2.50 in Department of Energy funds), and potential for [a few] customers to break out will limit downside in the shares. ... We're modeling an aggressive company-funded capital-expenditure ramp following DoE-aided capex funding through 2012. Market cap: $1.5 billion....MORE
