ChargePoint Holdings, Inc. (NYSE:CHPT) shares are trading lower after Goldman Sachs analyst Mark Delaney downgraded the stock to Sell (from Neutral) and cut the price target to $1.50 (from $2.00).
The analyst's bearish stance is due to expected slower growth in the number of EVs on the road in the U.S. and rising competition in EV charging.
In particular, Delaney expects the company to be impacted by slower U.S. EV sales as about 80% of its revenue is derived from North America.
Also, the analyst sees ChargePoint to face major competition, as Tesla, Inc. (NASDAQ:TSLA) recently sold its chargers as a merchant business in select situations, along with ChargePoint's general shift to multi-sourcing in North America.
Read: ChargePoint's Shifting Fortunes: Analyst Lowers Forecast Citing Slow EV Market And Emerging Cost Reduction Strategies
The analyst says ChargePoint is now partnering with AcBel, which it expects to meaningfully reduce its costs as it ramps up this relationship and works off inventory of existing products.
Delaney expects U.S. EV sales growth to slow down considerably versus prior quarters in the first quarter of FY24, based on current market conditions and the finalized EPA emissions standards for 2027-2032.
However, if demand for its chargers is stronger than anticipated, the analyst looks to be more positive on the stock.
Consequently, the analyst lowered EPS (incl. SBC) estimates to $(0.65) from $(0.60) for FY25, $(0.50) from $(0.35) for FY26, and $(0.35) from $(0.05) for FY27 on lower revenue and margins.
Investors can gain exposure to the stock via Direxion Shares ETF Trust Direxion Daily Electric And Autonomous Vehicles Bull 2X Shares (NYSE:EVAV) and SPDR S&P Kensho Intelligent Structures ETF (NYSE:SIMS).
Price Action: CHPT shares are down 3.78% at $1.78 on the last check Tuesday.