Investors may want to use weakness in EVgo Inc. (NASDAQ:EVGO) as an opportunity.
After a recent pullback from about $14 to $9.65, the charging network stock is oversold. From current prices, I’d like to see it accelerate back to $14 with several catalysts. For one, President Joe Biden’s Administration is moving forward with a $5 billion plan to create a network of charging stations, providing opportunities for electric vehicle (EV) charging stocks. In fact, the plan calls for an EV charging station every 50 miles on U.S. highways, with a goal of 500,000 by 2030. It also just partnered with JPMorgan Chase & Co (NYSE:JPM) to eventually place charging stations at about 50 branches of Chase Banks across the U.S.
Two, according to Evercore (NYSE:EVR) analyst James West, the stock has room to run. “We continue to believe that EV growth is part ‘push’ (regulation) and part ‘pull’ (consumer adoption),” West said, as quoted by TipRanks.“Government and auto [original equipment manufacturers] support the electrification and decarbonization of mobility. EVGO is a pure play on [direct current fast charging] and charging as a service with proprietary algorithms that analyze census and other data sources to pinpoint premium and convenient charging station locations, which meet high return hurdle rates.”
EVgo Earnings Have Been Solid
Three, earnings growth has been solid. In its fourth quarter, the company saw revenues of $7.1 million, which was a 70% improvement year-over-year. That was also above Street expectations of $6.1 million. Unfortunately, the company did post a loss of 67 cents per share, which was worse than estimates for a loss of nine cents. Still, with plenty of growth ahead of it, the EVGO stock could accelerate, especially with Q1 2022 earnings out on May 11.
Analysts appear to like the stock just as much. Credit Suisse (NYSE:CS) recently initiated coverage of EVGO with a “buy” rating and an $11 price target. They believe EVGO is a “market leader.” Analysts at Citi (NYSE:C) also raised their target price to $11 from $9. Again, I’d use recent weakness as an opportunity.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
