Capstone Turbine rises as Merriman begins at 'Buy'

Its stock gained 21 cents, or 7.2 percent, to $3.16. Earlier in the session, shares climbed to a fresh 52-week high of $3.19.

In a note to investors Monday, Jesse T. Herrick lauded Capstone's microturbine power generators, which use a variety of fuels to generate "clean, dependable" power for stationary locations or hybrid vehicles, he said.

Herrick predicted low-emissions power generation will likely outpace "ultra-clean" alternatives such as solar and wind power due to capacity constraints and dependence on subsidies, making Capstone's products poised for wide adoption as the demand for cleaner power generation increases.

Additionally, Herrick noted the company has begun taking pre-orders for its new, higher capacity models, which he expects will allow the company to expand into wider markets.

Herrick predicted the Chatsworth, Calif., company would post a loss of 24 cents per share in 2008, and a narrower loss of 14 cents per share the following year. Analysts polled by Thomson Financial expect a 2008 loss of 23 cents per share, and a 2009 loss of 15 cents per share.

The stock has more than tripled from a 52-week low of 86 cents last May.