RBC Capital Markets has initiated coverage of ChargePoint Holdings (NYSE:CHPT) with an Outperform rating and a 12-month price target of $9.00 on the EV charging equipment company.
RBC analysts wrote in a note, “We believe the robust product portfolio, differentiated strategy, and asset-light business model position it to be a key beneficiary of positive secular trends in vehicle electrification and growing demand for charging infrastructure. Our positive outlook on the industry and favorable view of CHPT’s strategy are underpinned by our deep-dive EV charging market analysis and associated charging infrastructure forecast.”
They believe that EV adoption is not an “if” it’s a “when”. They anticipate a surge in demand for charging infrastructure in tandem with the transition. RBC is confident that CHPT is well-placed, with the right products in the right markets, to seize this opportunity, and they see the recent drop in the company's stock price as an attractive buying opportunity.
CHPT holds the top position in the level 2 (L2) charging solutions market. According to RBC's analysis, CHPT commands an impressive 45% share of the L2 station market in the United States, over 4.25x larger than the next nearest networked competitor. The closest competition it faces comes from non-networked solutions and Tesla (NASDAQ:TSLA).
RBC anticipates that CHPT can achieve a revenue growth rate of 28% annually from FY2023 to FY2031, aligning with expectations for the charging infrastructure sector.
Management at CHPT expects that the adjusted EBITDA loss in FY4Q24 will be half of what it was in FY1Q24, indicating an estimated FY4Q24 adjusted EBITDA of approximately -$25 million. Their full-year revenue guidance falls within the range of $605M to $630M.
For 3Q24, management provided revenue guidance ranging from $150M to $165M, representing a 26% year-over-year increase at the midpoint. They have also offered guidance for an adjusted gross margin in the range of 22% to 25%, as well as adjusted operating expenses expected to be between $81M and $84M.
Shares of CHPT are up 0.48% in pre-market trading on Friday.