ChargePoint stock target cut by RBC Capital with Sector Perform tag maintained

RBC Capital has adjusted its outlook on ChargePoint (NYSE:CHPT) Holdings Inc. (NYSE: CHPT), a company specializing in electric vehicle charging solutions.

The firm reduced the price target on the stock to $2.50, down from the previous $3.00, while maintaining a Sector Perform rating.

The revision in the price target comes as ChargePoint reported an adjusted EBITDA that fell short of market expectations due to lower revenue.

The company's forecast for third-quarter fiscal year 2025 revenue also came in below previous estimates. This downward adjustment is attributed to ongoing demand weakness and a degree of caution stemming from recent changes in internal personnel.

RBC Capital noted that the timeline for ChargePoint to reach breakeven on an adjusted EBITDA basis has been extended to fiscal year 2026, a shift from the previous expectation of the fourth quarter of fiscal year 2025.

The delay, according to the firm, is consistent with their forecasts and does not come as an unexpected development.

In light of these factors, RBC Capital has revised its revenue and adjusted EBITDA estimates for fiscal years 2025 and 2026. The reduced price target of $2.50 reflects these updated estimates, although the impact is partially mitigated by improved cost savings and gross margins as identified by the firm in its analysis.

In other recent news, ChargePoint reported its Q2 fiscal 2025 earnings, where the company's revenue reached $109 million, aligning with the projected guidance. Notably, the company significantly reduced non-GAAP operating expenses and expressed a strategic focus on improving hardware margins and expanding subscription services.

The company's non-GAAP gross margin reached 26%, the highest in nearly three years, and managed port count grew to approximately 315,000, marking a nearly 10% increase in DC ports.

On the downside, ChargePoint's third-quarter revenue is projected to decline compared to the previous year, attributed to organizational restructuring and market-driven deal delays. Despite this, ChargePoint remains optimistic about its future, aiming to become adjusted EBITDA positive by fiscal year 2026.

The company also plans to prioritize software and hardware development to improve gross margins, expecting revenue growth to improve next year due to delayed deals, fleet vertical opportunities, and an improving macro environment.

InvestingPro Insights

In line with the recent analysis by RBC Capital, InvestingPro data also paints a challenging picture for ChargePoint Holdings Inc. (NYSE:CHPT). The company's market capitalization stands at a modest $718.76 million, and with a negative P/E ratio of -1.48, it underscores the company's current lack of profitability. This is further highlighted by a negative adjusted P/E ratio of -1.69, indicating that investors are skeptical about future earnings.

ChargePoint's revenue over the last twelve months up to Q1 2025 has been reported at $483.65 million, with a concerning decline of 6.36%. The gross profit margin in the same period is low at 5.13%, which aligns with RBC Capital's concerns about ChargePoint's ability to achieve cost savings and improve margins. Additionally, the stock price has experienced a significant decrease of 76.72% over the past year, reflecting the market's reaction to the company's financial performance and outlook.

InvestingPro Tips suggest that ChargePoint is quickly burning through cash and has not been profitable over the last twelve months. Moreover, analysts do not anticipate the company will be profitable this year, which may contribute to the high price volatility seen in the stock. However, it's worth noting that ChargePoint's liquid assets exceed its short-term obligations, providing some financial flexibility in the near term.

For readers looking for more detailed analysis and additional InvestingPro Tips, there are 11 more insights available on InvestingPro's platform, which can provide a deeper understanding of ChargePoint's financial health and stock performance.

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