EVgo (NASDAQ:EVGO) stock is no longer offering enough of a reward to justify a Buy rating in light of the risks, according to JP Morgan analyst Bill Peterson.
Peterson told clients that he still appreciates the company’s focus on charging sites, partnerships with key stakeholders in EVs, and ambitions in highway and rural charging development. However, the cost of these programs coupled with slowing growth necessitate a step to the sideline in his view.
“The company continues to be impacted by permitting delays and other delays in ‘make-ready’ and site improvements, including due to transformer shortages, which we continued to hear more about at the recently concluded CES event,” Peterson wrote on Thursday. “Furthermore, as a result of higher inflation and input costs, we think capital intensity will be higher than we had previously expected. Overall, we think risk/reward is relatively balanced at present and move EVGO to a Neutral rating.”
He lowered his price target on EVgo (EVGO) stock to $6 alongside the downgrade from Overweight to Neutral. Shares of the California-based company nonetheless trended positively in premarket trading on Thursday.
“We reiterate our top picks of Plug Power (PLUG), ChargePoint Holdings (CHPT), and Enovix Corp. (ENVX), where expectations have been largely reset and where we see the potential for relative outperformance as we move through the year,” Peterson concluded. “From a sector view, we continue to prefer infrastructure enablers in hydrogen and charging over vehicle makers/component suppliers.”
Read more on the potential for consolidation in the EV charging industry.