By Fintel. Originally published at ValueWalk.
Retail and institutional investors accumulated ChargePoint Holdings Inc (NYSE:CHPT) shares last week as their price eased 1.2%. The American electric vehicle infrastructure company that operates the largest network of EV charging stations in North America and Europe lists 503 institutions holding a collective 157.8 million shares. The growing level of institutional ownership contributes to the Fintel ownership accumulation score of 77.93, placing it in the top 10% of 24,626 screened companies. In comparison, insiders have been selling the stock, indicating a bearish sentiment.
The company operates across 14 countries and develops its technology for stations. ChargePoint generates sales by selling charging hardware and equipment and has a subscription segment that sells software services and warranties. The long term thematic behind the company for investors is that CHPT will be a beneficiary of the exponentially growing electric vehicle market over the next century.
CHPT shares ended last week relatively flat, losing 1.2%, but they remain almost 61% higher than the previous month.
Retail investor appetite grew over the last week and lifted the shares 11 slots into the top 100 most held securities among customers listing portfolios on Fintel. It ranked 93 last week.
The chart below shows the level of retail ownership versus the share price for the last three months. The most recent rally started a few days before the first quarter results, which fueled momentum in late May.
CHPT’s missed first quarter analysts’ earnings per share estimates, reporting a 27-cent deficit compared to an expected 20 cents a share loss, blaming supply chain disruptions.
On a brighter note, results beat analyst revenue forecasts, generating $81.6 million in sales compared to a $76 million expectation.
Management provided revenue guidance for the second quarter and reaffirmed full-year targets. ChargePoint expects to generate $96-106 million of second quarter sales, near analysts’ top end $105 million estimate.
For the full year, CHPT reaffirmed that they expect to generate sales of $450-500 million with gross margins of 22-26% and operating expenses of $350-370 million. The revenue targets were broadly in line with market expectations.
When analyzing the underlying options market for CHPT, Fintel analysis identified a Put/Call Ratio of 0.73. This score indicates bullish sentiment from all total disclosed put and call positions in the market. Two charts have been included below; the first shows the behavior of the put/call ratio for the stock over the last three months, and the second chart shows the call and puts options in the stock over a long term horizon showing multi year trends.
The chart below shows how investor sentiment turned negative during the significant share price declines and has become positive again throughout May.
The longer term chart identifies the large investment base in the stock with wide use of both put and call options over time. It is clear that the market was broadly bearish during the middle of 2021 but has become slightly bullish in 2022 following the steep drop in valuation.
Analyst Matt Summerville from DA Davidson notes that ChargePoint continues to operate at a high level in a challenging environment as demand outweighs supply. The firm forecasts that CHPT will be free cash flow and EBITDA positive by 2024 but reduced their target to $20 from $25, based on a sector multiple derating. DA Davidson remains ‘buy’ rated.
Vikram Bagri from Needham sees the possibility for additional upside with management leaving full year guidance unchanged, despite a substantial increase in backlog. Vikram highlighted how full year guidance implies a steep rise in profitability in the second half of the year. The institution left their ‘buy’ recommendation and $24 target unchanged post result.
CHPT has a consensus ‘overweight’ rating and an average target price of $12.80 among institutions, implying a 125% capital upside to the current share price. The consensus target has fallen significantly in 2022, in line with the share price declines.
Article by Ben Ward, Fintel
Sign up for ValueWalk’s free newsletter here.