Here’s an experiment. Remove all mega caps, choose your segment of the stock market, hang it up on a board and close your eyes. Then, stick a pin anywhere, and what do you get? Most likely a stock that has bled profusely for the past 12 months.
There are many to choose from. For example, shares of ChargePoint (CHPT) started the year with a 29% decline, further adding to last year’s losses.
Scanning the EV charging station leader’s prospects for J.P. Morgan, analyst Bill Peterson is not yet fully committed to the bull narrative. However, he believes the “recent pullback represents an attractive entry point to accumulate shares.”
As such, while the analyst reiterated a Neutral (i.e., Hold) rating on CHPT, he backs it up with a $26 price target, suggesting shares have room for 93% growth in the year ahead. (To watch Peterson’s track record, click here)
Peterson’s take follows investor meetings with members of the management team, from which he came away confident the company is “executing well amid COVID-related supply constraints.” Additionally, with opportunities to deliver “margin expansion as mix improves and scale increases,” the analyst believes the company is “well-positioned to drive solid growth in 2022 and beyond.”
Against a backdrop of worldwide supply constraints, ChargePoint has witnessed “frequent, but minor,” supply-related issues, although no essential component has been “singularly impacted.” The company’s main priority right now is to guarantee it has enough supply for the purpose of reducing product backlog and maintaining “customer satisfaction as it scales up.” That said, management believes it will be at least a few quarters until the supply constraints abate.
On the margins side, given that workplace charging represents a higher margin segment of its business, gross margins could get a boost from a return to the office. Other “potential tailwinds” for margin expansion include increased software sales (including from the acquisitions of has-to-be and ViriCiti), and “increased manufacturing scale (i.e. as DC fast moves from low volumes to higher volumes).”
Therefore, based on the favorable outlook for the EV industry, the company’s efforts to build on an “already strong product portfolio,” Peterson believes that over the next few years, ChargePoint is poised to “benefit” from growing EV adoption.
Among Peterson’s colleagues, rating wise, the bulls are slightly in front. CHPT’s Moderate Buy consensus rating is based on 6 Buys and 4 Holds. However, the bulls are out in full force where the average price target is concerned; At $28.90, the analysts expect the stock to change hands for ~115% premium over the next 12 months. (See CHPT stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
