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Previously, we gave EVgo (NASDAQ:EVGO) stock a “D” grade along with a warning for prospective shareholders. Now, even as we uncover more information and developments, we still can’t enthusiastically recommend investing in EVgo.
Maybe you’re intrigued with EVgo because you envision vigorous growth in the electric vehicle (EV) charging market. Your optimism is understandable, but EVgo has problems from a financial perspective.
The company’s long-term investors are holding a heavy bag which, for all we know, might get a lot heavier.
Is EVGO Stock Headed for $9?
Speaking of heavy bags to hold, EVGO stock has been like a tire slowly running out of air during the past three years. Sure, there have been share-price pops along the way, but they’ve all been short-lived.
There is at least one analyst that seems to favor EVgo. Or maybe we should say, the analyst favors the EV-charging market generally, and EVgo could benefit from that market’s expected growth.
Here’s the scoop. Recently, RBC analyst Chris Dendrinos reportedly issued a $9 price target on EVGO stock. Dendrinos sees “positive secular trends in vehicle electrification and growing demand for charging infrastructure.”
According to Barron’s, Dendrinos expects the “number of U.S. charging ports” to increase from “roughly 1 million today to more than 30 million by the end of the decade.” That’s fine, but is the analyst’s price target realistic?
If EVGO stock is trading at $3 and change as of this writing, then $9 is quite an ambitious price objective. Even with industry-wide tailwinds, there’s a limit to how much EVgo’s market capitalization can realistically grow during the next 12 months.
EVgo Is Ambitious but Far From Profitable
Don’t get the wrong idea here. For all we know, the EVgo share price might zoom to $9. But again, look at the stock’s past performance and then form your own conclusion.
While you’re conducting your due diligence, be sure to check EVgo’s financial figures. There’s no denying that EVgo’s second-quarter 2023 revenue increased substantially on a year-over-year basis. Based on that, EVGO stock might deserve a “D” grade instead of an outright “F.”
Revenue is only part of a company’s full fiscal picture, though. In Q2 of 2023, EVgo sustained a net earnings loss of $21.539 million. That’s a deep decline, as EVgo actually reported income (as opposed to a loss) totaling $16.997 million in the year-earlier quarter.
Another issue to contend with is EVgo’s chief executive transition. The company will have a new CEO in November, so this might not be the ideal time to wager your hard-earned capital on EVGO stock.
Don’t Get All Charged Up About EVGO Stock
Nothing is impossible on Wall Street, and the EVgo share price might catapult to $9. But ask yourself: Is the risk-to-reward scenario favorable if I invest in EVgo now? Or, could I end up holding the bag, like other long-term shareholders ended up doing?
Just because the EV charging industry could grow over the coming years, doesn’t mean EVgo will return to profitability anytime soon. Therefore, EVGO stock doesn’t earn a must-own recommendation from us, and we’re sticking to our “D” grade on it today.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.