Electric vehicle charging stocks are among the key beneficiaries of the rapid EV transition underway currently, according to a BofA Securities analyst.
The analyst has a $26 price target for ChargePoint and $11 price target for EVgo.
The EV Charging Thesis: The Biden administration's top priorities include robust funding for EV charging infrastructure, Greenwald said.
In addition to $7.5 billion for alternative fueling infrastructure in the infrastructure bill, the $3.5-trillion draft reconciliation contemplates another $13.5 billion for EV charging, the analyst said.
"We stress sentiment appears tied to macro spending package size - without specific expectations on where state funding will get allocated," he said.
Following the final lockup expiration for ChargePoint on Sept. 28, about 74 million additional shares become available for trading, translating to about 23% of the outstanding shares or 43% of the float, Greenwald said.
BofA's latest checks show a number of de-commitments from component suppliers, the analyst said.
BofA said it sees "offsetting risks" to the "outsized opportunities."
Related Link: Charging Infrastructure SPAC Plays: Is EVGo The Best Of The Bunch?
EVgo is well positioned to capitalize on the latest electrification tailwinds given their leading position as the largest U..S public "fast" charging network by number of locations, Greenwald said.
While the company has been successful with light duty vehicle fleets, management stressed confidence in their ability to capture larger vehicle fleets as customers, the analyst said.
"We perceive a clear willingness from EVGO to be more flexible in their approach to serve the segment."
With about 80% of charging in the U.S. done at home and most drivers driving about 30 miles a day, fleets are critical to scaling utilization, which could ultimately weigh on blended pricing, Greenwald said.
In the nearer term, the focus will be on charger deployment milestones, after previously missing targets and given the ongoing supply chain/permitting headaches, the analyst said.
BofA noted that Wallbox is the latest EV charging company poised to go public Monday through a SPAC deal following its merger with Kensington Capital Acquisition Corp. II (NYSE: KCAC).
With the SPAC trading below the $10 deal price, the firm said it will watch out for the magnitude of redemptions.
CHPT, EVGO Price Action: At last check, ChargePoint shares were down 4.16% at $19.58.
EVgo was slipping 5.96% to $7.89.
Related Link: If You Invested ,000 In ChargePoint Stock One Year Ago, Here's How Much You'd Have Now
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