Written by Cláudio Afonso | LinkedIn | X
RBC Capital analyst Chris Dendrinos released a new research note on the charging start-up EVgo doubling the firm’s price target on EVgo to $8.
Last week, the company announced it had received a conditional commitment for up to $1.05 billion in loan guarantees from the U.S. Department of Energy to finance the installation of approximately 7,500 EV chargers over the next six years.
RBC Capital analyst maintaining an Outperform rating on the shares saying the loan “removes the risk of equity dilution”.
“We believe the DOE loan provides a low cost financing mechanism and removes the risk of equity dilution while allowing investors to underwrite higher growth assumptions,” Dendrinos noted.
The analyst highlighted the long term view and “the flexibility to scale” that the loan provides.
“Exact timing of financial close and the pace at which EVGO can accelerate are still unknown though the $1.05bn guarantee provides the flexibility to scale with compounding BEV VIO growth and supports a robust long-term growth trajectory,” he wrote.
Following the revised valuation and the higher outlook, RBC is doubling its price target on EVgo to $8.
“We revise our valuation methodology to only a DCF based approach pending financial close and greater visibility on timing of accelerated build out. PT [price target] to $8 from $4 on outlook increase and revised valuation methodology,” he concluded.
On Tuesday, EVgo shares closed at $6.67, reflecting a year-to-date gain of approximately 87 percent.
EVgo expects to create more than 1,000 jobs with the majority being in the areas of construction in construction, engineering, development, and operations and maintenance areas.
Toyota Motor announced recently a collaboration with the charging company to install DC fast chargers in Baldwin Park, and Sacramento, both areas located in California.
Written by Cláudio Afonso | LinkedIn | X
