Out of the Gate: American Superconductor surges

The stock rose $5.55, or 15.4 percent, to $41.65 in morning trading. Earlier in the session, shares hit an eight-year high of $43.44.

In a note to investors, Kaufman Bros. analyst Theodore O'Neill reiterated his "Buy" rating on the Devens, Mass., company and raised his price target to $53 from $37, predicting the company could be producing components for 1,000 wind turbines per quarter by the end of 2010.

The new target implies an expected return of 47 percent from Monday's close of $36.08.

O'Neill said the company now has eight wind turbine customers and expects it to announce another two by the year's end.

"There is a worldwide shortage of wind turbines," he wrote. "Demand for turbines from its largest customer, Sinovel, increased dramatically at the end of the year."

Under the deal announced early Tuesday, American Superconductor will provide core electrical components for Sinovel's wind turbines, with shipments expected to run from 2009 to 2011.

The components will be used to support more than 10 gigawatts of wind power capacity, nearly doubling China's capacity at the end of last year.