ChargePoint's Growth Prospects Buoyed By EV Adoption, Analyst Warns Of Tesla Competition Amid Weak Commercial Deliveries

Needham analyst Chris Pierce reiterated the Buy rating on ChargePoint Holdings, Inc. CHPT with a price target of $4.

The analyst said he is still "broadly bullish" on EV adoption as a leading indicator for charger install growth, with U.S. EV sales up over 50% y/y.

Pierce views CHPT's leadership position in Level 2 AC charging and scale vs peers as compelling building blocks for a long thesis when industry growth returns.

In fact, the analyst considers CHPT as the best proxy for the charging industry given its commanding share (66% share of networked Level 2 Chargers in the U.S. per DOE data as of the end of 3Q23).

The company has 274k global charging ports under management, adding 19k ports in 3Q and ~50k ports through three quarters this year, showing a significant gap in added ports vs peers.

However, the analyst cautions on competitive concerns though, largely around Tesla, Inc. TSLA moving down in charging speeds to capture projected Level 2 Charger growth, and particularly around TSLA's potential willingness to subsidize charger sales to spur vehicle sales.

Following the quarterly results, the analyst lowered FY24 EBITDA estimates to $279.4 million from $284.1 million.

Pierce raised the FY24 revenue estimate to $506.2 million from $499 million.

ROTH MKM analyst Craig Irwin reiterated a Neutral rating on ChargePoint with a $2.00 price target.

With the elevated near-term uncertainty management will not provide F4Q23 (Jan) guidance.

Irwin says confidence remains shaken after the CEO and CFO's abrupt departure, and while management points to weak commercial deliveries, diverse industry contacts point to a fumbled restructuring.

According to the analyst, management will need to execute in a margin environment that will amplify ChargePoint's structural disadvantage relying on third-party manufacuring.

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Price Action: CHPT shares are trading higher by 10%% to $2.25 on the last check Thursday.

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