- EVgo (EVGO) continues to make partnerships that will increase its reach in the growing EV charger field.
- Analysts are warming up to the company and its valuation.
- The market for charging will likely be worth tens of billions of dollars soon.
EVgo (NASDAQ:EVGO) stock is well-positioned to rally due to the company’s impressive partnerships and its leadership in two key areas.
Meanwhile, an analyst at Credit Suisse was very bullish on EVGO stock in the wake of the company’s recently reported Q1 results, and the shares’ valuation is quite attractive after their recent, sharp decline.
EVgo’s competitive advantages in the EV charging sector space leave it poised to become the Tesla (NASDAQ:TSLA) of the space.
| EVGO | EVgo | $9.02 |
Impressive Alliances and Competitive Advantages
As I’ve noted in the past, EVgo has made partnership deals with multiple huge automakers and a number of sizeable retailers. Most recently, the company agreed to deploy its charging stations at 50 branches of JPMorgan’s (NYSE:JPM) Chase Bank.
And importantly, there was an indication that EVgo can meaningfully capitalize on its partnerships. Specifically, “a new joint marketing program” launched in Q1 by EVgo and Uber (NYSE:UBER) targeting Uber’s drivers has been significantly accelerating. In April, the total usage of EVgo’s chargers by the ride-sharing company’s drivers jumped 50%, compared with the average level in Q1, EVgo CEO Cathy Zoi explained.
Like Tesla, EVgo is ahead of its competitors in important areas. In EVgo’s case, the company has more fast-charging stations than any other public charging network in the U.S. EVgo notes that “More than 130 million people in the US live within a 10 mile drive of an EVgo fast charger.”
Tesla does have more fast-charging stations in the U.S. than EVgo, but only Tesla owners can use its stations. That makes EVgo the top fast-charging network for Americans who own EVs made by firms other than Tesla.
Additionally, all of its chargers use 100% renewable energy, an important selling point with most EV owners that none of the firm’s sizeable competitors (other than Tesla) seems to be able to match at this time.
Credit Suisse Upgraded EVGO Stock
On May 12, in the wake of EVgo’s Q1 results, Credit Suisse analyst Maheep Mandloi upgraded the company’s shares to “outperform” from “neutral.” Among the reasons for the upgrade are the company’s reiterated full-year guidance, its alliances, and its improved profitability.
Credit Suisse also noted that EVgo’s guidance did not take into account “the $615m being made available later this year to developers such as EVgo as part of the National Electric Vehicle Infrastructure Program.” That initiative is expected to be launched at the end of this year or in early 2023.
The bank added that the “valuation looks attractive.” I agree with that sentiment. After their recent pullback, the shares have a market capitalization of $2.35 billion. That market capitalization radically undervalues EVgo, because it is very well-positioned to capture a very large share of a market that’s likely to be worth many tens of billions of dollars annually.
Given EVgo’s strong competitive advantages and its very favorable valuation, I recommend that growth investors buy the company’s shares.
On the date of publication, Larry Ramer was long EVGO stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
