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EVgo (EVGO.US) gets $1.05 billion loan guarantee from the U.S. Department of Energy; shares soar over 35% at opening

AInvestThursday, Oct 3, 2024 10:00 am ET
1min read

EVgo (EVGO.US), an operator of a US electric vehicle charging network, has secured a conditional loan guarantee of up to $1.05 billion from the US Department of Energy to expand its EV charging network in communities across the country. Shares jumped more than 35% in the early trading session on the news.

The low-cost debt financing from the US Department of Energy's loan program office will help to add about 7,500 fast-charging stations across the country, with the largest state markets expected to be Arizona, California, Florida, Georgia, Illinois, Michigan, New Jersey, New York, Pennsylvania, and Texas.

If finalized, EVgo expects to complete the deployment of new sites by 2030. The company estimates that the expansion will create more than 1,000 jobs, with more than 700 of them being contracted resources hired by the company.

Meanwhile, Morgan Stanley upgraded EVgo's rating from "neutral" to "overweight" and added the stock to its positive catalyst watch list, with a target price of $7.

Analyst Bill Peterson said that EVgo has attractive and growing partnerships in areas such as auto OEMs, ride-sharing, and autonomous vehicle fleets. Peterson and his team expect EVgo to drive strong revenue growth in the coming years, even in a low EV adoption environment, based on higher utilization, higher rates, and an expanding network footprint accelerated by the US Department of Energy loan.

"We expect stable network throughput growth, flat or slightly higher gross margins, and better operating leverage to enable the company to achieve adjusted EBITDA breakeven before 2025," Peterson said.

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