ChargePoint: Bringing ICE Age Fleets to the Electric Future

In June, ChargePoint (CHPT) launched its fleet services solution, designed to facilitate fleet managers’ migration from fossil fuel use to electric batteries.

Needham’s Vikram Bagric believes the fleet electrification market has “huge potential,” and through 2030E, the analyst estimates that represents a roughly $3 billion opportunity for the company. By then, ChargePoint could also generate recurring fleet cash flows of up to ~$300 million.

Recently, the analyst held a virtual event with some of the company’s key employees for an in-depth discussion and demo of the new platform.

The company believes its fleet offering aligns with its ‘land and expansion strategy’. This is based on a rationale from customers who pre-purchase the hardware and software, but as their fleet grows, they continue to purchase ChargePoint’s service offerings. Bakri was impressed and believed the company has “a leading fleet product”.

“They provide a turnkey fleet electrification service with integrated software, advanced hardware, design/build services and technical support and O&M through their industry-leading Assure platform,” said the analyst.

But the new range of services is complemented by recent acquisitions.

Earlier this month, the EV charging network operator completed the acquisition of European e-mobility technology provider has.to.be, closely following the purchase of ViriCiti, a leading European electric fleet management company. Both are “key to achieving the company’s LT ambitions in the EU, as well as fleet segment targets.”

While fleet vehicles represent only a minuscule 3% of all US vehicles, they offer huge opportunities in the EU, where they make up about ~20% of all vehicles. The company will also benefit from government incentives and initiatives, and Bakri believes its estimates could still be conservative if ChargePoint expands outside the US and EU and increases the adoption rate of electric vehicles.

Overall, Bagri rates ChargePoint as a buy and its $35 price target implies strong upside potential of 77%. (To view Bakri’s record, click here)

The rest of the street is of a similar opinion when it comes to the share price; if we assume the average price target of $34, stocks will gain ~71% over the next year. As for the classification, most support CHPT’s success, although the support is not unequivocal; based on 7 buys, versus 3 hold and 1 sell, the stock qualifies with an average buy consensus rating. (See CHPT stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are those of the featured analyst only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.