The looming threat of the removal of the clean energy tax credit has rattled some, but JPMorgan analyst Bill Peterson says EVgo Inc. is set up for success.
"EVGO sees improving affordability of a larger variety of vehicles as being the primary driver of mass EV adoption," Peterson says, adding, "new EV sales would need to decline by 40% to impact the company's trajectory, which is unlikely to happen."
Even if the credit is removed, Peterson forecasts that "16% US [battery electric vehicle] penetration by 2030" is still achievable.
"While it has been reported that Trump's transition team intends to remove the 30D tax credit, there could be alternative ways that the administration changes it," he said, suggesting modifications like domestic content requirements or changes to MSRP and income eligibility.
EVgo’s Strategic Footprint Protects Growth
EVgo's strategic positioning in Republican-led states like Texas, Florida, and Arizona also sets it up for success, especially considering that these regions don't have the same emissions standards as California. Peterson added, "EVGO is relatively shielded from new EV sales growth, given it continues to drive momentum from a stable/growing EV fleet," while pointing to opportunities in autonomous and rideshare markets as potential additional growth drivers.
EVgo's confidence surrounding its Department of Energy (DOE) loan is "reaffirmed.” CEO Badar Khan called the process "de-risked" and nearing closure. Peterson feels the loan will allow EVgo to revise its EBITDA targets upward, stating, "We feel confident that EVGO will revise its EBITDA targets higher upon receiving the loan and disclose its planned build schedule through 2030."
Funding Concerns Seem Overblown
Despite some investor concerns about a potential clawback of funds, Peterson remains unconcerned, stating, "The government is unlikely to renegotiate its finalized contracts with US companies, especially if building charging infrastructure stimulates further EV demand and improves US competitiveness with China."
Peterson also noted that, despite concerns over the loss of the 30C tax credit, "EVGO's business model is not reliant on highway sites."
EVGO Stock: A Bullish Trajectory
With 10,000 viable sites and further expansion on the horizon, EVgo's trajectory is still bullish. Peterson concluded that, "The opportunities for growth continue to increase with EV adoption," making EVgo a strong contender in the EV infrastructure race.
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You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.
Electric vehicle (EV) stocks have been in focus since the election of Donald Trump, particularly following reports that the president-elect may consider ending EV tax credits - a move that's widely expected to have a chilling effect on already-sluggish domestic EV adoption.
One company that could feel the impact of any potential policy changes is EVgo, Inc. , a Los Angeles-based owner and operator of charging stations for electric vehicles across the United States. They offer electrical charging facilities directly to customers via publicly accessible charging stations. EVGO's fast charging solution provides its customers with up to 90 miles in 30 minutes of charge. The company has partnered with regional chain stores, automotive original equipment manufacturers (OEMs), shopping centers, gas stations, hotels, and more to help deploy its EV charging facilities.
EVGO stock has been remarkably volatile lately. The shares are up 69.8% on a YTD basis, but they've tumbled nearly 25% over the past month. However, EVGO has already bounced back from its recent lows, up 20% over the past week.
EVgo Delivers Solid Results
EVgo posted its third-quarter results on Nov. 12, where it posted a loss of $0.11 per share - in line with the market's expectations, though it was wider than last year’s loss of $0.09 per share. EVgo reported an EBITDA loss of $8.9 million, better than Wall Street’s $11 million estimates. Revenue for the quarter totaled $67.54 million, easily beating estimates of $65.97 million, while nearly doubling from $32.10 million in the year-ago period.
During the quarter, the company’s total network output (used to measure utilization) was up by 111% to reach 78GWh as it added 147,000 new customers, ending the quarter with a total customer base of 1.2 million.
“I’m pleased to report another record quarter anchored by strong revenues and triple digit year-over-year network throughput growth. Our deployment team continued to meet demand head-on bringing a record number of stalls online in the third quarter. With our conditional commitment from DOE for a loan guarantee of up to $1.05 billion announced last month, EVgo is poised to lead the industry as the charging provider of choice,” said CEO Badar Khan.
Management also upped their full-year guidance, as they now expect revenue in the range of $250 million to $265 million, and an adjusted EBITDA loss of $38.0 million to $32.0 million.
Analysts Say EVGO is a ‘Strong Buy’
Market experts are highly bullish on the stock, with a consensus “Strong Buy” rating from the 12 analysts in coverage - up from “Moderate Buy” two months ago. EVGO has 10 “Strong Buys,” compared to just 1 “Moderate Buy” and 1 “Hold” rating.
After earnings, UBS analyst William Grippin maintained a “Buy” rating on the EV charging stock, noting that EVGO is somewhat more insulated from EV demand cycles relative to pure charging hardware providers. Grippin has an $8.50 price target on EVGO.
Like UBS, Roth MKM analyst Craig Irwin thinks the pending DOE loan deal will be a positive driver for EVGO in the short term - and that same catalyst was the impetus for a new bull note from JPMorgan earlier this week, with the firm setting an $8 price target.
The average price target for EVGO now stands at $7.82, indicating expected upside potential of about 25% from current levels.
On the date of publication, Ruchi Gupta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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EVgo nears closure of $1.05 billion DOE loan, JPM notes
investing.com -EVgo Inc (NASDAQ:EVGO). is poised to close its $1.05 billion loan from the U.S. Department of Energy (DOE), JPMorgan analyst wrote after CEO Badar Khan expressed confidence at an investor meet.
The move is expected to accelerate the company’s expansion in the electric vehicle (EV) charging market.
Analyst at JP Morgan in a note said the loan process is largely within the company’s control, citing minimal risk due to EVGO’s proven business model and limited technical or permitting challenges.
“We not only emphasize our confidence that the loan will close, but potentially as soon as in the coming weeks and before year-end. We are placing EVGO on Positive Catalyst Watch,” analyst wrote in the note.
Note mentions that the loan process is largely within the company’s control, citing minimal risk due to EVGO’s proven business model and limited technical or permitting challenges.
The loan is expected to support EVGO’s goal of significantly expanding its charging infrastructure. Currently operating at an 800-stall run rate, the company plans to ramp up its installations to 1,500 stalls or more by the end of the decade.
Despite concerns around potential changes to U.S. policy under a second Trump administration, JPMorgan remains optimistic about EVGO’s prospects.
The company’s business model, which is not heavily reliant on federal incentives, is seen as resilient to policy shifts. Only around 10% of EVGO’s capital expenditures per stall are tied to federal funding, with the rest offset by OEM payments and state-level incentives.
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Dj Grocer, Fuel Marketer Meijer To Add Hundreds Of Ev Charging Stations - Opis
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Grocer, Fuel Marketer Meijer to Add Hundreds of EV Charging Stations — OPIS
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EVgo to Add Up to 480 Fast-Charging Stations at Meijer Stores in Six States
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