Electric vehicle charging company ChargePoint has recently been upgraded to Buy by analyst Mickey Legg, with a price target suggesting the stock could potentially double. Despite this positive news, shares are currently down as sentiment towards electric vehicles remains low.

Positive Outlook for ChargePoint Stock

Benchmark analyst Mickey Legg initiated coverage of ChargePoint stock with a Buy rating and a target price of $4.25. This forecast indicates potential gains of approximately 106% based on the previous day's closing price.

Market Response

In response to the optimistic rating, ChargePoint's shares have declined by 5% to $1.96 during Wednesday's trading session. In comparison, the S&P 500 and Nasdaq Composite indexes have experienced declines of 0.4% and 1% respectively.

Strong Market Position

Legg highlighted ChargePoint's dominant position in the industry, with around 70% market share in level 2 chargers. These chargers can provide approximately 30 miles of charge per hour and are commonly found at locations such as office buildings, hotels, and commuter train stations where vehicles are parked for extended periods.

Financial Stability and Growth Prospects

Describing ChargePoint as "well-capitalized," Legg noted that the company holds over $360 million in cash reserves and aims to achieve positive Ebitda by the end of 2024. Additionally, he anticipates the company's charging network to expand to 447,000 plugs by 2026, up from 225,000 by the close of 2023.

Stock Drop Hits ChargePoint Shares

Today’s stock drop brings ChargePoint shares’ year-to-date loss to about 15%. Electric vehicle (EV) related stocks aren’t performing well this year. Investors are concerned about a potential slowdown in demand growth following a strong 2023 where Americans purchased 1.2 million battery electric vehicles, marking a substantial 46% increase from the previous year.

Stock Performance Overview

  • Tesla stock has declined approximately 22% year-to-date.
  • NIO, XPeng, and Li Auto shares have taken hits of about 34%, 38%, and 12%, respectively.
  • Rivian Automotive and Lucid stocks are down about 34% and 14%, respectively.
  • Shares of charging peer EVgo have also experienced a decrease of around 31%.
  • The average decline in U.S.-listed EV-related stocks sits at approximately 23% for the year, as per calculations.

Market Capitalization Impact

Year-to-date declines in U.S.-listed EV-related stocks have collectively erased around $210 billion in market capitalization, excluding Tesla, which represents approximately 85% of the total EV-related market capitalization and accounts for about $35 billion of the loss.

Analyst Ratings and Price Targets

With the introduction of a new Buy rating, roughly 36% of analysts covering ChargePoint stock are recommending shares as a Buy. This is slightly lower than the average Buy-rating ratio for stocks in the S&P 500, which stands at about 55%. The average analyst price target for ChargePoint stock is around $3.50 a share.

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