EVgo downgraded on go-private proposal

EVgo’s (EVgo Stock Quote, Chart, News, Analysts, Financials NYSE:EVGO) largest shareholder has proposed taking the electric vehicle charging company private for US$2.00 per share, a development that has led Roth Capital Partners analyst Craig Irwin to downgrade the stock to “Neutral” from “Buy.”

In a Nov. 9 report, Irwin maintained his US$2.00 target, arguing that EVgo’s disappointing third-quarter results and limited progress toward profitability reinforce the need for restructuring.

LS Power Equity Advisors, which owns approximately 56% of EVgo, submitted an unsolicited, non-binding proposal Nov. 2 to acquire the remaining Class A shares for US$2 each in cash.

“The board formed a special committee of independent, disinterested directors to evaluate the proposal,” Irwin said. “Management declined to comment further on the proposal during the earnings call.”

EVgo reported third-quarter revenue of US$91.4-million, below Irwin’s US$100-million estimate and consensus of US$94.6-million. The company recorded an Adjusted EBITDA loss of US$3.5-million, compared with Irwin’s forecast loss of US$5.3-million and consensus of US$7.3-million. Its adjusted gross margin improved to 35.4% from 31.8% in the previous quarter.

However, network utilization remained at 20%, unchanged sequentially and down from 23% a year earlier. EVgo added 160 charging stalls during the quarter, bringing its network to 5,530. Management attributed weaker-than-expected charging volumes to slower growth at new locations, fewer customers converting from manufacturer-sponsored charging programs to paid charging, and subdued summer driving activity.

“Management’s growth investments are underperforming, and SG&A spending $5m below the original guide represents inadequate belt tightening,” Irwin said. “While we view the company as well positioned, we believe the priority should be restructuring the business and managing for profitability, which would be an obvious focus for any private equity investor.”

Charging revenue increased to US$71.8-million from US$55.8-million a year earlier, but lower revenue from EVgo’s eXtend business, which develops charging infrastructure for other companies, offset those gains.

Management reduced its fiscal 2026 revenue guidance to US$375-million to US$400-million from US$400-million to US$430-million. Its expected Adjusted EBITDA loss increased to US$15-million to US$30-million from the previous range of US$5-million to US$20-million. EVgo also reduced its planned charging stall additions to 1,075–1,275 from 1,350–1,625.

Irwin lowered his fiscal 2026 revenue forecast to US$387.5-million from US$415-million and increased his expected Adjusted EBITDA loss to US$22.2-million from US$20-million. For fiscal 2027, he forecasts revenue of US$520-million and negative Adjusted EBITDA of US$5-million.

His  target is based on 1.2 times estimated 2027 sales, matching the proposed takeover price.

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