By Michael Elkins
JPMorgan reiterated an Overweight rating and $15.00 price target on ChargePoint (NYSE:CHPT) after hosting in-person investor meetings with the EV charging company’s CFO, Rex Jackson, and VP of Investor Relations, Patrick Hamer.
JPMorgan analysts came away from the meeting incrementally more confident around ChargePoint’s competitive positioning, margin expansion opportunities, and path to profitability with expectations that the team will execute well on operations, driving scale, and managing working capital.
They wrote in a note, “We remain of the view that ChargePoint has the right strategy and is putting the pieces in place to be among a select few charging companies that can grow into profitability and thrive in the coming years. While markets continue to be volatile, we recommend investors to put in the work on OW-CHPT, one of our top picks and preferred name in the EV charging space, and we continue to see upside in shares for patient investors.”
ChargePoint anticipates driving margin expansion this year and next, aiming for a return to mid- to high-30% non-GAAP GM. Which, in combination with opex discipline, puts the company on track to reach cash flow positive by 4Q24.
On the near term, the company is seeing a typical 1Q slowdown as fewer installations occur in the US and Europe in winter months. Last year was an anomaly, likely exacerbated by supply constraints and other dislocations (holding back F4Q growth and smoothing out seasonal demand treads).
Also, the analysts note that while the company doesn’t have to raise capital this year, there is a potential for ChargePoint to proactively raise cash ahead of becoming cash flow positive in late 2024. The company could continue tapping its ATM, consider another convert or monetizing its growing receivables balance, and/or consider other means.
Shares of CHPT are up 0.69% in premarket trading on Friday.