EVgo's Focus On High-Traffic Locations Positions It As An Attractive Charging Operator, Says analyst

Benchmark analyst Michael Legg initiated coverage on the shares of EVgo Inc EVGO with a Buy rating and announced a price target of $3.

EVgo is an electric vehicle (EV) charging site operator focused on fast chargers for high traffic, high-density locations.

It owns and operates 3,240 stalls in 35 states strategically positioned to leverage its charging base as the EV industry matures.

The analyst expects continued financial progress through 2024, with 2025 expected to be a breakout year as the company achieves positive EBITDA by year-end.

The analyst has modeled the company adding 800 stalls per year. Cash at the end of 1Q24 totaled $175 million, which is sufficient in the analyst’s view to fund the business to 2H25.

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Any additional government funding would provide an additional financial cushion for EVgo to reach profitability, added the analyst.

Based on industry estimates, the EV market opportunity suggests a 30% CAGR for DC charging ports through 2030, said the analyst.

In the analyst’s view, EVgo is focused on a high potential market segment, enabling public fast charging in under penetrated urban and suburban locations such as airports, hotels, restaurants, schools, supermarkets, and office buildings.

EVgo’s strong market position is demonstrated by its 11 OEM and brand partnerships that include General Motors Company GM, Nissan Motor Co Ltd NSANY, Toyota Motor Corp TM, and the Pilot Flying J Company. 

The analyst believes the partnerships to be a recognition of the market position of EVgo’s network and growth opportunities.

The analyst noted that EVgo’s owned and operated model could prove to be a long-term recurring cash machine.

According to the analyst, the $3 price target, which is a premium to the median valuation of both the overall EV sector and the charging segment, is justified by EVgo’s strategic position in DC fast charging and emerging market leadership. 

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Price Action: EVGO shares are trading higher by 6.19% at $2.06 at the last check Wednesday.

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