American electric vehicle infrastructure company ChargePoint (NYSE:CHPT) is still combating supply chain issues. This has created uncertainty in the environment, which is impacting investor sentiment.
The ChargePoint earnings report for the third quarter of fiscal 2022, which was released yesterday, sent the company’s share prices falling. The top-line estimate beat and raised full-year revenue guidance could not impress investors, leading to sell-offs. This disappointment was primarily caused by the uncertain supply environment and larger-than-expected loss per share.
Expert’s Opinion
Nonetheless, the company took the supply constraints in its stride and executed well during the third quarter. Needham analyst Vikram Bagri looked into the company’s Q3 performance yesterday, and seemed upbeat about ChargePoint’s prospects. He reiterated a Buy rating on the stock, with a price target of $35. “Management noted that supply shortages resulted in spillover of some revenues from 3QF22 to 4QF22, which gives a higher level of confidence in the guidance,” said Bagri.
Better supply-chain management, favorable shift in revenue mix, and strategic pricing actions helped expand the non-GAAP gross margin. “The recent acquisitions increased the EU's (European Union) revenue share to 11%, a step closer to ChargePoint’s long-term target of about 30%,” noted Bagri.
Importantly, the fleet segment improved remarkably during the quarter, fueled by the acquisition of fleet electrification solutions provider ViriCiti. Significantly, fleet billings — an important area of focus for ChargePoint —grew 69% sequentially.
Recently, the California Energy Commission approved an investment of $1.4 billion in electric vehicle charging and hydrogen refueling stations. Bagri expects ChargePoint to benefit from this. He was also encouraged by the company’s relationships with state governments and believes that this will help ChargePoint to capture funds from the $1 trillion federal infrastructure bill.
Wall Street Weighs In
The Wall Street analyst consensus is, however, a little wary, but optimistic about the stock, with a Moderate Buy rating, based on 5 Buys and 4 Holds. The average price target for ChargePoint is $29.38, indicating an upside potential of 40.04%.
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Disclosure: At the time of publication, Chandrima Sanyal did not have a position in any of the securities mentioned in this article.
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