EVgo (NASDAQ: EVGO) shares are gaining premarket Thursday despite the stock being downgraded to Neutral from Overweight at JPMorgan.
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EVgo and other electric vehicle-related stocks are rising following positive earnings results from Tesla. EVgo has climbed more than 3% so far in early Thursday trading.
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However, JPMorgan analyst Bill Peterson downgraded EVgo to Neutral from Overweight, cutting the firm's price target on the stock to $6 from $10 in a research note.
The analyst said in a research note to clients that EVgo's network throughput growth will probably be dampened as a result of lagging site growth, which is due to various reasons.
Peterson adds that EVgo continues to be affected by permitting and other delays in “make-ready” and site improvements due to reasons including transformer shortages.
Earlier this month, EVgo announced EVgo ReNew, its maintenance program to ensure stations across its charging network meet its quality and technology standards.
Through the program, the company said it would be replacing, upgrading, or in some cases, retiring hundreds of stations over the coming year in order to enhance charger availability and build range confidence for EV drivers.
Furthermore, the JPMorgan analyst explained that as a result of higher inflation and input costs, the company's capital intensity will be more elevated than previously expected. As a result, JPMorgan sees EVgo's risk/reward as relatively balanced at current levels.
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