EV Charging Stock Plays: Why This Analyst Prefers ChargePoint Over Blink Charging

The electric vehicle revolution that is expected to morph over the next two decades is likely to create several ancillary beneficiaries, and one such subsegment is EV charging infrastructure.

Here's what a Stifel analyst has to say about two stocks in the space. 

The EV Charging Stock Analyst: Stephen Gengaro initiated coverage of ChargePoint Holdings, Inc. CHPT shares with a Buy rating and $29 price target.

The analyst initiated coverage of Blink Charging Co. BLNK with a Neutral rating and $29 price target.

The EV Charging Thesis: Coinciding with the rise in EVs on the roads, investment in EV charging infrastructure will likely rise at a CAGR of over 20% over the next 20 years, the analyst said.

There is a need for $60 billion in spending on EV charging infrastructure by 2030 in the U.S. and Europe and over $190 billion by 2040, with an expected need for over 300 million chargers by 2040, Gengaro said, citing Bloomberg estimates.

Related Link: Why 2 EV Charging Stocks Face 'Offsetting Risks' To 'Outsized Opportunity'

ChargePoint Analyst Sees Asset-Light Model As Positive: ChargePoint's strong network coupled with its capital-light business model should enable it to start generating positive free cash flow as early as 2024, Gengaro said in a note.

It is a leading asset-light EV charging company with about 200,000 roaming partner ports available across North American and Europe, the analyst said. 

The company also offers an integrated portfolio of hardware, cloud services and support for business and EV drivers, he said.

The company has about 73% market share of networked level two charging, seven time greater than its closest competition, Gengaro said. 

Blink Capital Spending A Headwind? Blink's established network in the U.S. and expansion into Europe positions it well to benefit from the expected surge in EV charging infrastructure, Gengaro said.

The company's focus on public charging and its four flexible business models should help establish it as a leader in the public space, the analyst said. 

Yet the near-term high capital spending required to fund growth and the uncertainty around public charging utilization likely leads to negative FCF and is a headwind to Stifel's DCF-based valuation, the analyst said.

BLNK, CHPT Price Action: Blink shares were rising 0.73% at $29 late in Tuesday's session.

ChargePoint was rallying by 6.63% to $21.23. 

Related Link: 5 Key EV Headlines You May Have Missed This Week