UPDATE: Deutsche Bank Downgrades A123 Systems; Removes PT

According to a research report published this morning, Deutsche Bank has downgraded A123 Systems AONE from Buy to Hold, and has removed its $6 PT. In the report, Deutsche Bank said, “AONE announced on Monday that they would be replacing a large number of battery packs due to a manufacturing defect. The estimated cost of this action - $55MM over the next several quarters – represents a severe impact to a company that had $187MM of balance sheet cash at 2011YE and was already facing a projected FCF burn of at least $155MM in FY2012. We no longer have sufficient confidence that AONE can raise sufficient capital (without massive equity dilution) and/or continue to augment their book of future business; therefore, we are lowering our rating.” A123 Systems closed yesterday at $1.40.