Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Shares soar as ChargePoint earns upgrade from Bank of America

Published 30/05/2023, 18:50
© Reuters
CHPT
-

Bank of America upgraded ChargePoint Holdings Inc (NYSE:CHPT) to a Buy rating (from Neutral) and lowered their 12-month price target for the stock to $14.00 (from $15.50) after reassessing the electric vehicle infrastructure company’s line of sight to cash inflection.

Bank of America values ChargePoint on a DCF basis. Analysts project an adjusted EBITDA of $136 million in CY25 and $303M in CY26, 20% over the implied consensus. Against the current EV, CHPT trades at

They wrote in a note, “The likely reason for recent underperformance is cash burn. ChargePoint realized a $290mm drag in free cash flow in CY22 (FY23) and enters CY23 with $295mm in cash and $105mm in Short Term Investments. The valuation for EV chargers is substantially based on terminal value with free cash flow negative operations inherent in the short term. Therefore, cash flow line of sight is a critical gating item for investors and one that has become increasingly challenged in this risk off market. Like our reassessment of EVgo, we rebuild our model from the ground up to focus on cash burn and cash inflection.”

With an updated model, Bank of America expects cash inflection in 4QCY24, matching management’s long-stated indications. The analysts estimate operating cash breakeven in 3Q22 (before working capital) followed by +$19M in 4Q24.

With operating cash scales to >$100M in CY25, and expected working capital drag in 2025, they expect a net cash positive year absent any outside financings. The drivers of this inflection are growth of network and recurring subscription revenues scaling over operating expenses.

For the 1Q24, Bank of America estimates ChargePoint will report an EPS of ($0.14), ahead of the consensus estimate of ($0.17).

Shares of CHPT are up 13.60% in mid-day trading on Tuesday.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.