On Thursday, Cantor Fitzgerald shifted its stance on EVgo, Inc. (NASDAQ:EVGO) stock, raising the rating from Neutral to Overweight despite lowering the price target to $4 from the previous $5.
This adjustment reflects a change in revenue projections, as the firm has chosen to exclude potential earnings from the EVgo eXtend program beyond 2027 until further notice from the company.
The decision to upgrade EVGO comes after the stock experienced a significant year-to-date decline, falling roughly 51%, in contrast to the S&P 500 which has remained stable. The current trading price of EVGO is $1.75, which has prompted the reevaluation based primarily on the stock's current valuation.
Cantor Fitzgerald's valuation of EVgo is based on a 10-year discounted cash flow (DCF) model. The assumptions include a 2.5% terminal growth rate and a weighted average cost of capital (WACC) of 12%, which aligns with industry standards.
The analyst outlined several key risks that could impact EVgo's (NASDAQ:EVGO) performance. These include intense competition in the sector, potential delays in the deployment of charging stations, ongoing supply chain disruptions within the electric vehicle industry, the effects of Chinese sanctions and the availability of raw materials, and the company's ability to scale its operations effectively.
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