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ChargePoint: Gross Margins Will Improve as the Year Progresses, Says Analyst
Stock Analysis & Ideas

ChargePoint: Gross Margins Will Improve as the Year Progresses, Says Analyst

Despite the impact of global supply chain issues, ChargePoint (CHPT) managed to beat top-line expectations in FQ1.

The EV charging station leader’s revenue more than doubled to reach $81.63 million, coming in ahead of the Street’s $76.05 million forecast. Networked charging systems revenue rose by 122% from the same period last year to $59.6 million and subscription revenue increased by 63% to clock in at $17.6 million.

With a 67% sequential increase, the company also attained record quarterly growth in Europe, where ChargePoint now has roughly 57,000 activated ports under management (as of the end of April), out of a total of 188,000+.

However, marring the print, EPS of -$0.27 fell short of the -$0.21 analysts expected.

As for the outlook, the company sees Q2 revenue coming in between $96 million and $106 million, at the mis-point below consensus at $105 million. ChargePoint also confirmed its expectation for revenue between $450 million to $500 million in fiscal year 2023.

So, a mixed bag of a report, although Evercore’s James West applauds the continued strong demand and a growing backlog in the face of a challenging supply chain environment. In fact, the company pointed out that its backlog grew by 35% sequentially.

West also thinks ChargePoint is well positioned to improve on the profitability front.

“We expect CHPT’s gross margins to improve as the fiscal year progresses due to fewer supply chain constraints for mature products, technology driven improvements, newer products being launched, and passing higher costs along to customers. Many of these levers are within the company’s control,” the analyst said. “Investors do not have to determine exactly how this mega theme of electric mobility unfolds as the company’s growth is directly tied to the accelerating adoption of EVs in North America and Europe.”

To this end, West reiterated an Outperform (i.e., Buy) rating although to “reflect a lower market multiple,” the price target is lowered from $28 to $24. Nevertheless, there’s still upside of 93% from current levels. (To watch West’s track record, click here)

Most analysts agree with West’s stance; based on 9 Buys vs. 3 Holds, the stock boasts a Strong Buy consensus rating. At $21.81, the average target stands at ~75%. (See ChargePoint 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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