Clean Tech Titans: Can Enovix, ChargePoint, Archer, Joby Defy The Doubters?

As the Q2 earnings season approaches, clean tech stocks like Enovix Corp ENVX and ChargePoint Holdings Inc CHPT are catching the spotlight, navigating a landscape fraught with both opportunities and challenges.

According to JPMorgan analyst Bill Peterson, the sentiment among institutional investors is notably cautious, with “elevated short interest pervasive across our coverage universe.” This ambivalence is driven by concerns about company execution and balance sheets, keeping investors on the sidelines until clearer signals emerge.

Clean Tech’s Recent Rally: A Temporary Surge?

Despite the overall uncertainty, Clean Tech stocks have experienced a notable upswing over the past month, with the sector up 9%.

However, these stocks remain down 10% year-to-date, highlighting ongoing volatility. The iShares Global Clean Energy ETF ICLN is down 10.61% and the First Trust NASDAQ Clean Edge Green Energy Index Fund QCLN is down 11.44% YTD.

Leading the recent rally, however, are EV charging and advanced batteries, where Enovix and ChargePoint are making significant strides.

Enovix

Peterson states, “Since 1Q, Overweight-rated ENVX has announced several commercial agreements in the smartphone and mixed reality spaces, providing investors with more evidence of technology validation in consumer electronics.”

The company’s strategic moves are bolstered by its plans to scale up production at Fab-2, further appeasing investor concerns. This positive momentum prompted Peterson to raise Enovix’s price target from $12 to $18.

ChargePoint

ChargePoint, meanwhile, is carving out its position in the EV Charging sector, buoyed by a 9.9% EV/PHEV penetration rate exiting 2Q. Peterson notes, “Considering the mixed demand environment overall, we think 2Q is unlikely to mark an inflection point for US EV Charging companies, but there will likely be sequential improvement to both top-line and margins with bigger improvements slated for the 2H contingent upon EV demand recovery and cost reduction efforts.”

ChargePoint’s potential reaffirmation of year-end profitability targets could pave the way for a strong second half of 2024, driven by improved demand and cost-cutting measures.

eVTOL Stocks: The Patient Investor’s Game

In the realm of Advanced Air Mobility, stocks like Archer Aviation Inc ACHR and Joby Aviation Inc JOBY have surged recently, although Peterson warns that this momentum may not align with fundamentals.

“While US-based JOBY and ACHR have rallied 25-30% over the last 1-month period, we think the stocks have moved ahead of fundamentals given few changes in either company's stories that de-risk the earnings outlook,” the analyst said.

However, as these companies inch closer to FAA certification, upcoming catalysts such as airline purchase orders could potentially justify their lofty valuations.

Plug Power’s Hydrogen Hurdles: Policy Uncertainty Looms

The hydrogen sector, represented by Plug Power Inc PLUG, is entangled in policy uncertainty, particularly around the awaited 45V tax credit guidance. This delay has stalled clean hydrogen projects, posing a challenge to Plug Power's growth trajectory.

Peterson highlights, “We think 2Q top-line results are unlikely to move the needle too much for Neutral-rated Plug Power as a result of the 45V tax credit overhang.” Despite these issues, there is potential for positive movement in the second half of the year if macroeconomic conditions improve.

Read Also: 3 Under-the-Radar Clean Energy Stocks With Upside Potential, Regardless Of Who’s In The White House

Political Risks, Economic Headwinds Abound For Clean Tech

The Clean Tech sector's journey through 2024 remains precarious, with political risks and economic headwinds casting long shadows. Although Clean Tech companies are expected to project revenue growth and margin improvements in the coming quarters, Peterson warns of persistent volatility tied to the upcoming presidential election.

He advises, “Earnings commentary is likely to include views on political risk from the upcoming presidential election, demand in 2H24 assuming macro improvement, access to liquidity or means to reduce cash burn if the macro does not improve, as well as path to profitability for those who have yet to announce formal targets.”

As Clean Tech stocks like Enovix, ChargePoint, Archer Aviation, and Joby Aviation lead the charge, the sector stands at a critical juncture, poised between potential technological breakthroughs and the reality of a challenging investment landscape.

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