Up 90% YTD, Is It Too Late to Buy This Breakout EV Stock?

EVgo (EVGO) owns and operates a fast-charging network for electric vehicles (EVs) in the U.S., providing electricity to drivers via access to its charging network. EVgo is building and operating the infrastructure and tools required to accelerate the adoption of EVs by households, commercial fleets, ride-sharing companies, and businesses. 

With more than 1,000 charging locations in 35 states, EVgo is among the largest public fast-charging networks in the U.S. It has partnered with automakers, grocery stores, shopping centers, and gas stations to expedite transportation electrification. 

Shares of EVgo have outpaced the broader markets in 2024, up more than 90% year-to-date. Despite its spectacular run this year, EVGO stock trades 65% below its all-time highs, valuing the company at a market cap of $2.09 billion. 

EVgo Bags $1.1 Billion in Funding

Last week, EVgo announced it received a conditional commitment for a loan guarantee of up to $1.05 billion in debt financing from the U.S. Department of Energy’s Loan Programs Office to expand its charging network in community locations across the U.S. 

The financing will accelerate EVgo’s efforts to scale its charging footprint and increase access to reliable public charging stations. Further, the financial deal will facilitate the build-out of 7,500 additional fast charging stalls across the U.S. 

“EVgo shares the Biden-Harris administration’s goal of increasing EV charging access in the communities that need it most," said CEO Badar Khan. "This historic investment would meaningfully accelerate our network expansion to provide public charging to EV drivers across the United States.”

EVGO stock rallied over 83% in the final two days of last week's trading following this funding announcement, as it now has access to growth capital at a lower interest rate. 

Strong Revenue Growth

The rising adoption of electric vehicles in the U.S. has allowed EVgo to increase its sales from $17.5 million in 2019 to $161 million in 2023. In Q2 of 2024, it reported revenue of $66.6 million, an increase of 32% from $50.6 million in the year-ago period. Revenue growth was driven by increases in charging network sales, while network throughput rose to 66 GWh in Q2, up from 25 GWh last year. 

EVgo added more than 131,000 new customer accounts in Q2, an increase of 60% year over year. The number of customer accounts rose by 59% in the last 12 months, surpassing the 1 million milestone. It was the 7th consecutive quarter of double-digit charging revenue growth for EVgo. 

However, the company remains unprofitable, and reported an operating loss of $134 million in the last 12 months. Notably, EVgo’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) loss has narrowed to $7.9 million from $15.18 million last year. 

Another key metric for EVgo is its operating cash flow of $7.55 million in Q2, compared to an outflow of $6.52 million last year. This suggests that the company generates enough cash flow to sustain its operations. 

What's the Target Price for EVGO Stock?

Out of the 13 analysts covering EVGO stock, eight recommend “strong buy,” one recommends “moderate buy,” and four recommend “hold,” for a consensus rating of “moderate buy.”

The average 12-month target price for EVGO is $5.23, which the stock has already surpassed. In fact, after the recent rally, the shares are only 6.4% away from their Street-high target of $7.00.

EVgo is forecast to increase its sales from $161 million in 2023 to $353 million in 2025. Its losses per share are forecast to narrow to $0.28 from $0.46 in this period. The company is at the epicenter of the EV market, and looks positioned to deliver substantial returns if it can shore up its profit margins and expand operations sustainably. 

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On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.