Evgo Inc (NASDAQ: EVGO) is up about 50% on Thursday after a JPMorgan analyst issued a super bullish note in its favour.
Bill Peterson upgraded the electric vehicle charging company to “overweight” this morning and said its shares could climb to $7, which translates to about an 80% upside on its previous close.
“Unlike hardware-software peers, Evgo’s fast charging owner-operator model has been scaling well with higher utilization and charge rates in the current muted EV environment,” he told clients in a research note on Thursday.
Evgo stock is trading at a year-to-date high of $6.0 at the time of writing. Our market analyst Crispus Nyaga also sees a favourable risk/reward in the company’s share price.
Evgo stock has regained sharply
The first half of 2024 wasn’t very kind for Evgo shares that traded at under $2.0 at one point only. Part of the reason was a slowdown in electric vehicle adoption that weighed on EV stocks.
But the share price has since recovered. The JPMorgan analyst is confident they’ll push further up after the California-based company received a conditional commitment for more than $1 billion loan guarantee from the Department of Education.
EVGO will use this debt financing to ramp up the buildout of its public fast-charging network across the United States.
According to Bill Peterson:
Evgo is expected to continue benefitting from higher utilization on every charger on its network, especially if competitor charging networks are unable to deploy chargers due to lack of demand.
Evgo stock does not, however, pay a dividend at present.
Evgo Inc is yet to turn a profit
Bill Peterson expects “core owner-operator players outperforming other charging peers” over the next few years, which is to say he’s not as bullish on other EV infrastructure companies as he is on Evgo.
The JPMorgan analyst is positive on EVGO also because it reported a record revenue of $66.6 million for its second quarter in August. At the time, Badar Khan – the company’s chief executive said:
We’re seeing record demand in the industry, which we’re well situated to capture given our position as an owner operator. We’re confident this momentum will result in strong returns for our shareholders.
And then there’s the loan guarantee from the Department of Education that does make it more exciting to own.
Nonetheless, it would be wise for investors to also consider the fact that Evgo Inc is not yet profitable – neither is it expected to turn a profit any time soon.
So, all in all, while Evgo stock may prove to be a lucrative investment, the ride will likely be a volatile one from here on out.
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