On Monday, UBS initiated coverage on EVgo, Inc. (NASDAQ:EVGO) stock, a leading provider in the U.S. direct current fast charging (DCFC) network market, with a Neutral rating and a price target of $4.00. The firm's analysis suggests that EVgo is positioned to capitalize on the growing trend of transportation electrification among consumers and commercial fleets.
The firm forecasts an annual top-line growth of 30% for EVgo through 2028, attributing the growth primarily to increased utilization and charge rates on the company's existing DCFC network, which has already seen significant capital expenditure. The firm also anticipates that EVgo's adjusted EBITDA will turn positive in the second half of 2025.
The coverage initiation reflects a balanced perspective on EVgo's stock, recognizing the company's potential in a growing market. The firm acknowledges the advantageous position EVgo has due to its pre-established network infrastructure, which could support the company's revenue growth without requiring immediate further investments.
Despite the positive outlook on EVgo's growth and network utilization, UBS also points to various near-to-medium term risks. These risks are seen as counterweights to the company's positive attributes and have led to the firm's cautious stance on EVgo's shares at this time.
The UBS coverage on EVgo underscores the company's role as a significant player in the expanding electric vehicle infrastructure, a sector that is expected to grow alongside the increasing adoption of electric vehicles. The firm's neutral stance indicates a watchful approach, taking into account the potential for growth against the backdrop of existing market risks.
In other recent news, EVgo Inc. (NASDAQ:EVGO), a leading electric vehicle charging network provider, has been making significant strides. The company reported strong first-quarter revenue for 2024, exceeding expectations at $55.2 million, and demonstrated significant year-over-year growth in network throughput and charger utilization rates.
Despite reporting an adjusted EBITDA loss of about $7.2 million, EVgo remains confident in its full-year revenue guidance for 2024 and aims to achieve breakeven adjusted EBITDA by 2025.
EVgo's customer base has increased by a remarkable 400% since April 2020, recently surpassing one million registered accounts. This growth aligns with the broader trend of increasing electric vehicle adoption and the corresponding demand for accessible public charging infrastructure.
The company also plans to incorporate the North American Charging Standard connectors into its infrastructure, targeting regions with a significant presence of compatible vehicles.
Benchmark upgraded its outlook on EVgo, raising the price target to $5 from the previous $3 while maintaining a Buy rating on the shares. This adjustment reflects the company's strong performance, marked by a significant increase in the utilization of its charging network. Cantor Fitzgerald upgraded the company to an "Overweight" rating and RBC Capital Markets gave an "Outperform" rating.
Other developments include a significant increase in usage by rideshare drivers, with commercial throughput on EVgo's network more than tripling in the first quarter of 2024 compared to the same period in 2023.
Furthermore, EVgo has announced plans to incorporate the North American Charging Standard connectors into its infrastructure, targeting regions with a significant presence of compatible vehicles. These are part of EVgo's recent developments in its quest to expand its network and improve the customer experience.
InvestingPro Insights
As EVgo, Inc. (NASDAQ:EVGO) navigates the dynamic market of electric vehicle charging, recent data from InvestingPro offers additional insights. With a market capitalization of approximately $1.07 billion, EVgo's financial health is underpinned by a balance sheet that holds more cash than debt, providing a measure of stability in a volatile industry. The company's revenue has experienced a notable surge, with a growth rate of 164.33% over the last twelve months as of Q1 2024. This aligns with UBS's forecast of robust top-line growth for EVgo in the coming years.
However, the InvestingPro Tips highlight that EVgo's stock price has been highly volatile, with significant fluctuations over the last week and month. The volatility is a factor investors should consider, especially since analysts do not expect the company to be profitable this year. Moreover, the stock is trading at a high revenue valuation multiple, indicating that it may be priced optimistically relative to its current financial performance.
For those looking to delve deeper into EVgo's financials and stock performance, InvestingPro provides an array of additional tips. There are 15 more InvestingPro Tips available, including insights into valuation multiples and profitability forecasts. Interested readers can take advantage of these tips and more by using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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