JPMorgan downgrades electric vehicle charging stock EVgo, sees little upside going forward

Published Thu, Jan 26 20236:52 AM EST

JPMorgan thinks it's time to move to the sidelines on electric vehicle charging company EVgo . Analyst Bill Peterson downgraded the stock to neutral from overweight, saying that the company continues to be impacted by permitting delays and supply chain shortages. EVgo also recently announced it will focus much of its capital and resources on existing sites, reducing its ability to focus on new site development — which J.P. Morgan believes is critical to long-term growth. "We continue to like the company's strategy with a core focus on urban/suburban charging at good site locations with notable partnerships with vehicle OEMs, rideshare and autonomous vehicle companies," wrote Peterson. However, "we think its network throughput growth will likely be dampened as a result of slower site growth." The stock traded higher by 2% in the premarket despite the downgrade. While EVgo recently announced a partnership with Amazon's Alexa , which will guide electric vehicle users to EVgo charging stations, the company's growth outlook remains tricky. JPMorgan said early signs of consolidation among electric vehicle charging operators and larger energy players, such as Shell and Volta, could pose a threat to EVgo. Such partnerships provide competitors with greater scale and capital to deploy chargers. Further challenges lie ahead for the broader electric vehicle charging market, J.P. Morgan added. To be sure, the analyst noted that proposed electricity based credits "could provide some incremental uplift (estimated $3.6B total sum available for distribution across eligible players) by the 2025 timeframe if electricity from biogas becomes a credited fuel." However, he also said that higher inflation and input costs mean that "capital intensity will be higher than we had previously expected." The analyst lowered his price target for the company to $6 from $10. The new target implies upside of less than 1% from Wednesday's close. EVgo shares are off to a strong start for the year, up 33.6%. However, shares have fallen approximately 20% over the past 12 months. —CNBC's Michael Bloom contributed to this report.