Electric vehicles (EV) charging service provider Blink Charging (BLNK) closed 5.3% lower on August 13 after the company reported second-quarter earnings, despite revenues crushing consensus estimates and surging year-over-year.
Takeaways From Q2 Results
Not only did Blink Charging’s quarterly revenues of $4.4 million surpassed consensus estimates by 41%, but the metric also climbed 177% year-over-year. Strong product sales and partial gains from the acquisition of charging port provider Blue Corner were tailwinds for the top line. (See Blink Charging stock chart on TipRanks)
Notably, Blink Charging contracted, sold, or installed 3,264 commercial and residential EV charging stations during the second quarter, almost nine times more than the year-ago quarter.
However, Blink Charging reported a loss of $0.32 per share, 100% wider than the consensus estimates and an alarming 191% wider than the year-ago quarter. A manifold increase in compensation expenses and general and administrative (G&A) expenses impacted the company’s profitability.
Management explained that high compensation expenses were a result of hiring top talent for the company’s growth. The management also indicated that the Delta variant of the coronavirus might negatively impact economic recovery and fuel global supply chain constraints.
Analyst’s Take
Keeping the Q2 performance in mind, Needham analyst Vikram Bagri makes a few key observations about the prospects of Blink Charging.
The uncertainty around the Delta variant, along with the persistently high expenses, led Bagri to expect the company’s stock to be strained for the rest of 2021.
Moreover, even though the company sailed through supply chain constraints in the second quarter, the management mentioned in its earnings call that the EV supply equipment industry was beginning to feel the pangs of semiconductor scarcity.
Bagri said, “We expect the cautious near-term commentary and the Q2 miss to lead to short-term stock underperformance.”
Nonetheless, a strong fundamental outlook encourages the analyst about the company’s long-term prospects, 2022 onwards.
Growing International Footprint
Blink Charging is aggressively focusing on expanding its footprint in the EU market. The acquisition of Blue Corner in Q2 was a step in that direction. With the acquisition, Blink Charging took over more than 8,000 chargers across Belgium, Luxembourg, the Netherlands, and France. The acquisition also enabled a contract for the company to deploy 500 stations across Belgium.
This apart, the action-packed Q2 also included an agreement for General Motors’ (GM) EV customers to access Blink Charging’s charging points; a collaboration with Nissan Motor to install 100 Blink HQ chargers for the latter’s Leaf vehicles in Santiago, Chile; and a deal to set up charging stations in Israel.
Furthermore, Blink Charging also plans to add more charging stations in Los Angeles by the end of this year. Bagri projects the number of EV chargers in the U.S. to witness about 25% CAGR through 2030.
Again, the company recently received a $12.5 million grant from Florida’s Department of Environmental Protection to deploy 52 DC Fast Charging sites (DCFC), highlighting Blink Charging’s competitive advantage in the area of DCFC.
“Blink charging won 25 out of 32 sites through competitive solicitation. The contract should be finalized by early Q3 with installation in 12-18-month timeframe after that, which implies revenue realization in 2022,” said Bagri, throwing light upon his bullish sentiment for the long-term.
He further noted, “We believe there is upside to our estimates through higher charging infrastructure utilization, faster EV adoption, and more traction in international markets.”
Foot Note
Strong competitive advantage in the EV charging market, given its “early mover advantage, four business models, significant cash pile on the balance sheet, vertically integrated value chain, and strong footprint” makes Blink Charging a worthy long-term investment.
With this, Bagri reiterated a Buy rating on the stock and lowered the price target to $37 from $39. He suggested that it would be prudent for long-term investors to climb the wall of worry.
Wall Street’s Take
The Wall Street remains cautious, as the stock has a Moderate Buy consensus based on 1 Buy and 2 Holds. The average Blink Charging price target of $37 implies 8.5% upside potential.
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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.
