The electric vehicle (EV) revolution may have hit some speed bumps, but the transition away from old-school combustion vehicles continues to accelerate. According to the International Energy Agency (IEA), global EV sales are projected to reach a staggering 17 million units in 2024, a remarkable 35% increase from the previous year. Data from Inside EVs shows an 18% year-over-year increase in Q1 sales for a group of 19 automakers that excludes Tesla (TSLA), and the Biden administration has broadened the scope of tax credits for buyers to help give EVs a shot in the arm.

As industry heavyweight Tesla appears to pivot away from its Supercharger network, Evgo Inc. (EVGO) is one small industry player that's turning heads. They're at the forefront of the charging game, boasting over 1,000 fast charging stations spread across 35 states. And they just reported a blockbuster first quarter, with revenue jumping 118% to $55.2 million. That's some impressive growth, and it's got Wall Street sitting up and taking notice. 

RBC Capital is also cheering from the sidelines, giving EVGO a thumbs up with an “Outperform rating” and a $4 price target after checking out their impressive earnings. Let's dive in and take a closer look at what's got analysts so charged up about this company.

EVGO Reports Stellar Growth, Narrowing Losses

Valued at a modest $600 million by market cap, Los Angeles-based Evgo is a Russell 2000 Index (RUT) component. Like many smaller growth stocks, it's taken a hit in 2024 amid diminished hopes for Fed rate cuts, with the shares down by a relatively steep 44.4% so far this year. Longer term, the stock has tumbled 91.8% from its 2021 all-time highs.

Like many other startup EV companies, Evgo is still seeing red, with an EBITDA loss of $101 million on the books for fiscal 2023. 

However, the company's recently reported Q1 earnings results offered a glimmer of hope. EVGO managed to reduce its EBITDA losses to just $7.2 million in Q1 2024, down significantly from over $20 million in the year-ago quarter. Revenue shot up by 118.2% year-over-year to $55.2 million in Q1, surpassing analyst expectations, while the loss of $0.09 per share beat expectations for a wider deficit of $0.11 per share. 

And looking ahead, CEO Badar Khan offered some insight on the company's timeline toward working out of that red ink: “EVgo’s compelling unit economics, operating leverage, along with the tailwind of long-term EV adoption, gives us confidence that we will achieve adjusted EBITDA breakeven in 2025 and create significant shareholder value,” he asserted.

For fiscal year 2024, management is targeting total revenue of $220 million to $270 million, with the adjusted EBITDA loss ranging between $48 million and $30 million. Analysts, for their part, are looking for EVGO to report a narrower full-year loss of $0.37 per share in fiscal 2024.

Priced at about 0.84x expected 2024 sales, EVGO is pretty cheap right now.

What Are the Catalysts Fueling Upside for EVGO?

Tesla's recent pause in expanding its Supercharger network may have thrown the industry into turmoil, but it could be a boon for smaller players like EVGO, who now have a potentially golden opportunity to speed up their expansion and carve out a larger market share. It seems the race to power up America's EVs is just getting more intense!

To that end, EVGO and hybrid EV heavyweight Toyota (TM) are making electric vehicle ownership even more appealing. Earlier this year, they beefed up their charging partnership, offering a cool bonus for anyone who snaps up the new 2024 Toyota bZ4x. Buyers and lessees get a year of free, fast charging across EVGO's extensive national network.

They've also ramped up their infrastructure by adding 250 new charging stalls in the first quarter of 2024 alone, including some from their EVGO eXtend program. It's clear they're really stepping on the accelerator when it comes to expanding their network. 

And it's paying off - EVGO now boasts over 981,000 customer accounts. They welcomed nearly 109,000 new customers in the first quarter, marking a 63% increase from last year. Plus, their network's throughput has skyrocketed to 53 GWh, up from just 18 GWh the previous year.

Analysts Say EVGO Stock is a Resounding 'Buy'

When it comes to EVGO's prospects, analysts seem to be singing a fairly optimistic tune. One brokerage firm that's particularly bullish on EVGO's prospects is RBC Capital, which recently upgraded the stock from “Sector Perform” to “Outperform,” citing the company's competitive edge over its peers.  While RBC did trim its price target from $5.00 to $4.00, the firm still sees EVGO as well-positioned to capitalize on sluggish EV demand amid a high-interest rate environment, which could hamper smaller rivals. 

And RBC isn't the only one singing EVGO's praises. Based on 10 analyst recommendations, the consensus rating for the stock is a "Moderate Buy." 

Drilling down further, 3 analysts are suggesting a “Strong Buy,” 1 is calling for a “Moderate Buy,” and 6 are recommending a “Hold.” And here's the kicker – the mean price target among these analysts is a lofty $5.05, representing a massive 153% upside from current levels. 

The Bottom Line on EVGO Stock

As the EV landscape continues to evolve, EVGO stands out for its solid footprint of charging networks and partnerships with industry leaders, which could prove crucial as Tesla's latest Supercharger move shakes up the industry. Of course, like any unprofitable penny stock, there's a higher-than-average degree of risk to be expected when investing in this name - but for investors who have the risk tolerance to ride out the bumps in the road, there could be some significant upside potential. With strong Q1 numbers and breakeven EBITDA on the horizon, EVGO is definitely a speculative EV stock worth considering at current levels.