Needham analyst Chris Pierce maintained ChargePoint Holdings Inc
The re-rating reflects 2Q results, company commentary, lower estimates, and a lower target multiple.
Economic uncertainty leads to sluggish commercial customers while fleet customers experience delays electrifying their vehicles, driving consensus CHPT revenue estimates lower for the third consecutive quarter.
Pierce still views CHPT as the best "pick and shovel" way in his coverage to play EV adoption, with uncertainty on the timing of growth rising in conjunction with investor skepticism.
He modeled a 3.5x increase in CHPT-activated ports by 2030 vs. current levels, despite industry assumptions of 10x growth in EVs on U.S. roads and ~9x growth in installed chargers.
CHPT is the acknowledged industry leader in Level 2 AC Charging, the fattest part of the growth curve, with a 55% per the U.S. Dept of Energy's Alternative Fuels Data Center by his math, increasing his confidence that his forecast for the size of the market is conservative. However, his faith in the timing of revenue growth moves lower.
U.S. EV adoption is coming, despite minimal press and investor enthusiasm, with CHPT citing 48% growth Y/Y. Unfortunately, CHPT's Commercial customers are in capital preservation mode vs. growth mode, looking for creative solutions to maximize usage of their already-installed chargers despite levels of charger utilization pushing against an upper bound.
In contrast, CHPT's Fleet customers continue to be handicapped by a lack of vehicles to charge, pushing out infrastructure needs.
The analyst views both as issues that will eventually resolve themselves, with CHPT benefiting from a bolus of pent-up demand.
Level 2 AC Chargers didn't see a similar volatile price environment vs. Level 3 DC Fast Chargers, with CHPT paying a premium for supply certainty on Level 3 components in a dynamic end market environment vs. a more business-as-usual approach with Level 2 components during the pandemic. CHPT also cited the lower complexity of Level 2 AC Charging equipment as a further buffer.
US EV adoption is hitting record levels, but faster EV adoption is being met with slower growth in CHPT revenue, lowering investor confidence in the link between these metrics.
Price Action: CHPT shares traded lower by 12.3% at $6.19 on the last check Thursday.
