EVgo, a provider of direct current fast charging for electric vehicles, has earned a ‘Neutral’ rating and a $4 price target from UBS analysts in their initial coverage of the stock.
Shares of EVgo traded hands at $3.65 in the early afternoon on Tuesday.
EVgo is poised to benefit from the ongoing electrification of transportation trend by consumers and commercial fleets.
As of the end of 2023, EVgo had about 950 fast charging locations across 35 US states, including 2,890 direct current fast chargers. Notably, EVgo’s chargers support all currently available EV models and charging standards in the US.
The bank's analysts forecast 30% per year topline growth through 2028 driven by increasing utilization and charge rates on EVgo’s existing direct current fast charging network, with adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) seen inflecting positive in the second half of 2025.
“In our view, EVgo offers a more predictable revenue profile as compared to pure play charging hardware providers which are relatively more exposed to new EV sales demand cycles,” they wrote.
However, they take a cautious view of EVgo shares as they see their positive attributes balanced by several near- and medium-term risks, including political risks ahead of the November 2024 presidential election.
“A Republican administration could pose a risk to key Federal EV tax credits and/or make obtaining Department of Energy funding more difficult,” the UBS analysts wrote.
They also pointed to limited near-term catalysts to drive a re-rating of the stock.
“Shares have approximately doubled off of June 2024 lows and screen relatively expensive to peers. We prefer to wait for a better entry point,” they wrote.
“Diversification of auto OEM partnerships would make us relatively more positive. EV subsidy rollbacks would make us incrementally more negative.”