Analyst: ‘Bumpy Road Ahead’ For A123
A day after Waltham-based A123 Systems (which has operations in Westborough) reported a 40 percent drop in revenue and losses of $125 million in its recent fiscal quarter, an analyst that follows the company said the setbacks that led to the poor results may be too much to overcome in the electric vehicle battery market.
Michael Lew, an analyst for Needham & Co., wrote today that a prismatic cell recall – which amounted to a $51.6-million warranty expense for A123 – exposed the company’s customers to competitors on firmer financial footing and has created capacity constraints that are delaying other production programs. The company has hired a strategic advisor, he noted.
A123 has 10 programs expected to transition to commercial production later this year.
“However, we believe all these programs are at risk given A123’s recent shortcomings, and we would be surprised if customers have not already begun to seek alternate battery suppliers,” Lew wrote.
Lew said the company’s future may be in producing batteries for wind power installations.
Needham maintained its “hold” rating on the company’s stock, based mostly on the value of its Livonia, Mich., battery plant to potential suitors.
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