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ChargePoint: A Prime Beneficiary of Growing EV Adoption
Stock Analysis & Ideas

ChargePoint: A Prime Beneficiary of Growing EV Adoption

ChargePoint (CHPT) might have missed expectations on the bottom-line in its latest quarterly report, but that is of little concern to Evercore analyst James West, who says the company is “charging towards mainstream adoption.”

EPS came in at -$0.21, $0.05 shy of the consensus estimate, although the company posted a $1.77 million beat on the top-line, with revenue hitting $65.03 million, a 78.8% year-over-year increase.

Looking ahead to FQ4, the company expects revenue between $73 million and 78 million, above the Street’s call for $72.03 million. ChargePoint also increased its full year revenue guidance from $225 million-$235 million to $235 million-240 million. Also above consensus, which had $231.75 million.

West says the quarter was marked by “clear signs of the scale that CHPT continues to build.” ChargePoint added more commercial and fleet clients than in any other quarter in its history. Fleet billings rose by 69% quarter-over-quarter and by almost 200% from the same period last year while residential billings grew by 63% and 50%, respectively. Furthermore, European revenue rose by 190% year-over-year.

It is still early days for the EV segment, but the quickening pace of adoption in North America and Europe places ChargePoint at the center of this secular trend. Over the next 20 years, in the U.S. alone, West anticipates a 60x increase in U.S. charging demand, boosted by a 40-50x uptick of electric vehicles in operation. By 2040, the analyst sees EV U.S. penetration reaching more than 70% of new car sales.

And for investors looking at EV charging plays, West thinks ChargePoint will be their first port of call.

“We continue to believe the company is viewed as an index for charging and investors look to it first for exposure to the sector given its scale, transatlantic reach, and role as the ‘arms dealer’ for the industry,” the analyst said. “As an EV infrastructure designer and manufacturer, CHPT is agnostic to where its equipment is installed with the desire to sell the hardware and become the software provider. Therefore, investors do not have to determine exactly how this mega theme of electric mobility unfolds.”

To this end, West reiterated an Outperform (i.e. Buy) rating, along with a $34 price target. The implication for investors? Upside potential of 62%. (To watch West’s track record, click here)

Granted, not everyone is as enthusiastic about CHPT as West. The Street is almost split down the middle on this one; based on 4 Buys and 5 Holds, the stock ekes out a Moderate Buy consensus rating. On where the share price is heading, the outlook is more conclusive; the forecast calls for one-year gains of 40%, considering the average price target clocks in at $29.38. (See CHPT stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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