EVgo (EVGO, Financial), a leading U.S. electric vehicle charging network operator, has secured a conditional loan guarantee of up to $1.05 billion from the U.S. Department of Energy. This funding is set to significantly expand its charging network across various American communities.
The low-cost debt financing from the Department of Energy Loans Programs Office will help EVgo establish approximately 7,500 fast charging stations nationwide. Major state markets for this expansion are expected to include Arizona, California, Florida, Georgia, Illinois, Michigan, New Jersey, New York, Pennsylvania, and Texas. If finalized, the deployment of new stations is projected to be completed by 2030.
EVgo anticipates that this project will create over 1,000 jobs, with more than 700 being filled by contracted resources from the company.
In light of this development, JPMorgan has upgraded its rating on EVgo from "neutral" to "overweight" and added the stock to its positive catalyst watch list, setting a price target of $7. Analyst Bill Peterson noted that EVgo's partnerships with automotive OEMs, ride-sharing companies, and autonomous vehicle fleets are both growing and appealing.
Peterson and his team foresee strong revenue growth for EVgo in the coming years, driven by increased utilization rates, higher fees, and an expanding network footprint accelerated by the Department of Energy loan, even amidst slower electric vehicle adoption. They predict stable network throughput growth, steady or slightly improved gross margins, and enhanced operational leverage to allow EVgo to achieve adjusted EBITDA breakeven by 2025.
