ChargePoint shares fell almost 7% on Tuesday after the stock was downgraded by UBS analysts from ‘Buy’ to ‘Neutral.’
The analysts also lowered their price target on the stock from US$9 to US$2.25.
Shares of the electric vehicle (EV) maker had shed 7.5% at US$1.84 in the early afternoon Tuesday.
The UBS analysts wrote in a note to clients that they were moving “to the sidelines” on the stock as ChargePoint’s topline trajectory has become less clear. They noted this comes amid the restructuring of its management team, including the appointment of Rick Wilmer to CEO.
“[We are] cautious on growth – ChargePoint is the share leading in the US for Level 2 (L2) charging ports. The company gained share this year and has 44% of the publicly accessible installed base in the US,” they wrote.
“However, the broad customer base could increase its topline correlation with EV deliveries and sales.”
The analysts expect as deliveries slow that ChargePoint to see a greater material impact than other competitors with a lower L2 market share.
They also expect a tougher competitive environment to pressure ChargePoint’s share in Fleet.
“ChargePoint noted weakness in Fleet, which is in contrast to other peers like Bling Charging Co. that highlighted the end-market as an area of strength,” they wrote.
Additionally, they cited uncertainty around the timing of the company reaching breakeven, pushing out their breakeven adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) expectation by a year from 2026 to 2027.
“While we view management changes as a potential positive development, we will be looking for updates on the go-forward strategy and path to breakeven EBITDA given this target was held despite 3Q 2024 preliminary results that were 30%-plus below our and Street estimates,” they wrote.
“New CEO Wilmer brings 30-plus years of experience within the broader tech sector and has a track record for scaling high growth companies - given his background, we'd expect more granular update on the go-forward strategy during the December 6th earnings conference call.”
ChargePoint will report its financial results for the third quarter ending October 31 on Wednesday, December 6, after the stock market closes.
Contact the author at emily.jarvie@proactiveinvestors.com
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