This EV charging station stock can surge 50% thanks to climate bill

Published Wed, Sep 7 20226:50 AM EDTUpdated Wed, Sep 7 20227:39 AM EDT

ChargePoint can surge nearly 50% as the market for electric vehicle charging stations gets a boost from the Inflation Reduction Act, according to Credit Suisse. Analyst Maheep Mandloi initiated coverage of ChargePoint with an outperform rating, as the electric vehicle infrastructure company is a leader in the industry. "We are positive on ChargePoint, as it benefits from a capital-light growth model, first-mover advantage with integrated solutions, and an attractive valuation," Mandloi wrote in a Wednesday note. Credit Suisse set a $22 price target, representing 49.2% upside from where shares closed Tuesday at $14.75 per share. The stock advanced 1% in Wednesday premarket trading. The analyst said ChargePoint's capital-light model could help the company scale its business after the passing of the IRA. "Sections 30D, 25E, 45W, and 30C of the Inflation Reduction Act offer tax credits for EVs and EV infrastructure in the US. The Infrastructure bill also provides $7.5B to strategically deploy EV charging and alternative fuel infrastructure," Mandloi wrote. The company has activated more than 180,000 ports in the U.S. to date, representing more than 48% of market share. Meanwhile, more than half of Fortune 500 companies have adopted ChargePoint. ChargePoint also has a strong balance sheet, especially among its peers, to help it manage growth and make strategic acquisitions to cement its leadership, according to the analyst. "We forecast revenues grow at a 48% CAGR from $241m in FY22 to $5,621m in FY30. While in the near term, our estimate for chargers sold is in line with BNEF estimates; in the medium to long term, we estimate a 10% increase in charger installations in the US, as regulatory policies favor accelerated EV adoption and incentivize charger infrastructure as well," read the note. To be sure, there are some challenges ahead of the company, including greater competition or any breakthroughs in technology such as fuel cells that could disrupt the business. —CNBC's Michael Bloom contributed to this report.