After sinking to new all time lows last week, shares of A123 Systems (AONE) are popping higher today on news that Morgan Stanley upgraded to Overweight from Equalweight and raised the price target to $9/share which would be a double from Friday’s closing price. 

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The firm cites three catalysts as well as revenue visibility. 

1.  Sees revenue ramp (could top 2009 & 2010 totals over next three quarters) as several customers enter volume production.  You might remember that the CEO alluded to this revenue ramp during the last earnings conference call.

2.  Details could emerge soon about its production contract with a major US auto manufacturer for 2013

3. Margin improvements with utilization improvements going forward

The firm also notes investors have lost faith, indicating the worst may be over for the stock.  They contend the company has sufficient liquidity through next year even if revenues continue to stagnate. 

Despite today’s surge, shares of AONE still remain technically suspect and in my opinion it’s best to continue to avoid at this time.  To be sure the worst is indeed over, I’d want to see the stock surge above and hold the $6 level in the coming weeks.