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Low expectations give EVGO stockholders a nice surprise


Source: various photographs / Shutterstock.com

Los Angeles-based charging station manufacturer EVgo (NASDAQ:EVGO) has more than 850 fast charging points in its network. Still, Wall Street pundits don’t expect EVgo to turn a profit anytime soon. But then, setting a low bar could lead to an unexpected rise in EVGO stock. That bump could happen soon, as EVgo released its first quarter 2022 financial results on May 11. This event provides an opportunity for EVGO stock to recover from its recent slump. After hitting a 52-week high of $19.59 late last year, the stock fell to the $9 level not too long ago.

Keep in mind that so-called growth stocks have been beaten in 2022, so it’s easy to see why the investment community has put EVgo in the niche, at least for now.

Skeptics might call EVGO a failing growth stock, but they can’t deny that EVgo is a growing company. For example, EVgo recently added four electric vehicle (EV) fast chargers to a site in Maryland. With that, the company’s total number of charging stations in the state of Maryland now exceeds 100.

Still, some analysts didn’t seem particularly excited about EVgo’s financial prospects, especially in the near term. Reportedly, the analyst community expected EVgo to report a quarterly profit loss of 10 cents per share.

This is where it gets really interesting, though. Cantor Fitzgerald Analyst A. Sheppard expected EVgo to post a loss of $1.76 in earnings per share for 2022. That’s pretty pessimistic, but Cantor Fitzgerald also has an “overweight” rating and a price target. of $14 on EVGO stock. JPMorgan Chase & Co. (NYSE:JPM) analysts also have a $14 price target on the stock, while analysts at Tudor, Pickering, Holt & Co. envision the stock rising to $16. It almost seems like investors are getting mixed messages – is Wall Street pessimistic on EVgo, or optimistic?

Ultimately, EVgo reported revenue of $7.7 million for the first quarter of 2022, up 86% year-over-year. Additionally, the company reported a loss in earnings per share of 21 cents. The real news, however, is that EVgo’s gross loss of $0.6 million in the first quarter of 2022 marked a dramatic improvement from the gross loss of $1.7 million in Q1 2022. ‘last year. Using this metric, we can conclude that EVgo is at least on the fiscal right track.

Perhaps the best strategy is to ignore the mixed messages and focus on growing EVgo as a business, which is impressive. Whatever happens in the short term, investors could potentially make outsized profits if EVgo’s stock price hits $14 or $16. So don’t underestimate the power of the fast-charging revolution or EVgo’s exciting growth story in 2022.

As of the date of publication, David Moadel had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

David Moadel has delivered compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga and (of course) InvestorPlace.com. He is also the Chief Analyst and Market Researcher for Portfolio Wealth Global and hosts the popular YouTube financial channel Looking at the Markets.

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