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Energy & Critical Metals

Enphase Beating Odds; Needham Reiterates “Buy”

The solar energy industry is expanding and setting the stage for a boom in related markets like the solar microinverter market. Global energy technology…

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The solar energy industry is expanding and setting the stage for a boom in related markets like the solar microinverter market. Global energy technology company Enphase Energy (ENPH) has developed a semiconductor-based microinverter, which converts energy at the individual solar module level. Its fully integrated solar-plus-storage solutions also contribute generously to the company’s growth. Notably, Enphase carries significant clout in the solar energy market.

The company recently delivered solid second-quarter 2021 results on the back of strong demand for its microinverter systems across all regions. Since the earnings release, the share price of Enphase rallied 5% to close at $181.42 on Wednesday. (See Enphase Dividend Date and History on TipRanks)

The strong quarterly performance prompted Needham analyst Vikram Bagri to reiterate a Buy rating on the stock with a price target of $195, implying a 7.5% upside potential to current levels.

He said, “We believe that strong growth lies ahead with the rollout of new products, the launch of additional storage features, international expansion and growing manufacturing capacity.”

He added, “We reiterate our Buy rating as we focus on the company's earnings power looking out to 2025 given what we believe will be an increasingly supportive government policy environment for renewable energy and other market forces that will drive accelerating adoption of solar power in the residential and commercial markets over the next several years.”

Bagri was also encouraged by Enphase’s quarterly shipment of 2.36 million microinverters, despite persistent supply constraints. In the earnings call, management noted that demand outpaced supply, and expects supply to improve in the third quarter with the addition of more sources.

Improving supply constraints was another factor that the analyst considered. The shortages of AC FET drivers narrowed with the addition of a new supplier in the second quarter, and is expected to improve further as another supplier will be added by the end of the third quarter.

Bagri believes that a robust product pipeline in residential storage and small commercial applications, along with its efforts to expand foothold in international markets, will expand Enphase’ serviceable addressable market and help drive growth. The company is also expected to gain more share in its core U.S. residential solar market. A low-leveraged balance sheet is also enabling Enphase to pursue strategic acquisitions, which, the analyst believes, will enhance its market position.

Bagri noted, “We look for the shares to move higher, supported by more consistent financial results, a promising product pipeline, and improved profitability. In the short run, component constraints have put a damper on growth. We view this as nothing more than a pause in the Enphase growth story.”

Consensus among analysts for Enphase is a Moderate Buy based on 8 Buys and 4 Holds. The average Enphase price target of $206.33 implies 12.9% upside potential.

To find good ideas for stocks trading at attractive valuations visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post Enphase Beating Odds; Needham Reiterates “Buy” appeared first on TipRanks Financial Blog.

Energy & Critical Metals

ServiceNow Collaborates with Infosys to Digitize Operations

Digital workflow company ServiceNow (NOW) has teamed up with its longstanding partner Infosys (INFY), the Indian multinational information technology company,…

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Digital workflow company ServiceNow (NOW) has teamed up with its longstanding partner Infosys (INFY), the Indian multinational information technology company, to provide enterprise-level service management (ESM) for manufacturing customers, helping them with their digital transformation.

Shares of ServiceNow, with a current market capitalization of around $130 billion have gained nearly 39% over the past year. (See ServiceNow stock charts on TipRanks)

The combination of ServiceNow Operations Technology Management (OTM) with Infosys Cobalt cloud blueprints will enable the digitization of factories, floors, and plant operations for the energy and retail sectors, as well as other manufacturing industries.

Binoy Gosalia, Global Head of Industry Partnerships at ServiceNow commented, “Speed and agility are critical for maintaining OT security. Infosys Cobalt's Enterprise Service Management Café accelerates its manufacturing clients' ServiceNow journey with an AI-powered plug-and-play deployment solution. We look forward to our continued collaboration enabling manufacturers to navigate and succeed in today's rapidly changing environment.”

Barclays analyst Raimo Lenschow recently increased the price target on ServiceNow from $667 to $784 (19.8% upside potential) and reiterated a Buy rating on the stock.

Lenschow said in the coming months, investors will make 2023 their base year for valuations. With respect to software, he added, “with its high growth rates, this move is important as valuation levels often see a meaningful step down.”

Overall, the stock has a Strong Buy consensus based on 18 Buys and 2 Holds. The average ServiceNow price target of $667.21 implies a 2% upside potential.

According to TipRanks’ Smart Score rating system, ServiceNow scores a “Perfect 10,” suggesting that the stock is likely to outperform market averages.

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The post ServiceNow Collaborates with Infosys to Digitize Operations appeared first on TipRanks Financial Blog.

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Energy & Critical Metals

Wait for ChargePoint Stock to Bottom Out Before Taking a Position

Down 42% year-to-date, ChargePoint (NYSE:CHPT) stock does not look worthy of investor’s money.
Source: JL IMAGES / Shutterstock.com
The largest manufacturer…

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Down 42% year-to-date, ChargePoint (NYSE:CHPT) stock does not look worthy of investor’s money.

Source: JL IMAGES / Shutterstock.com

The largest manufacturer of electric vehicle charging stations in the world looks good on paper, but so far its potential has not translated into success for shareholders.

ChargePoint went public earlier this year at the height of the frenzy over special purpose acquisition companies (SPACs).

However, like many SPAC deals, CHPT stock has collapsed in the months since it made its market debut. Given the share price’s persistent weakness, shareholders might be best advised to cut their losses.

CHPT stock does seem to have gotten pulled down with the broader SPAC sector. After threats of greater regulation over the deals led Wall Street to cool on so-called “blank check” companies or “reverse mergers,” underlying fundamentals have also dragged down the company’s share price.

The company’s revenue for its fiscal 2021 year ended on Jan. 31 amounted to $146.5 million, only 1% higher than the $144.5 million in revenue it generated in the previous 2020 fiscal year.

Coming just months before it went public, the fiscal 2021 financial results led investors to sour on ChargePoint and its prospects, prompting a swift and deep sell-off.

While ChargePoint says it wants to sell its electric vehicle charging units to both commercial and retail customers, the reality is that the vast majority of its current revenue (75%) comes from commercial sales to businesses and office parks.

The general public remains slow to adopt electric vehicles with only about 2% of the vehicles on U.S. roads today being plug-in electric.

Electric vehicles are clearly the future of the automotive industry, but they have a long way to go to achieve mass adoption. Consumers continue to raise concerns ranging from slow charging times to limited driving range when it comes to electric cars, trucks and SUVs.

Lofty Goals and CHPT Stock

Despite its middling financial results and a slowing growing market, ChargePoint continues to have lofty goals and sets itself ambitious targets. Maybe too ambitious.

The company has set a target of achieving $1 billion in sales by 2025, a nearly 10 fold increase from its current sales in a little more than four years.

ChargePoint has also raised its full-year guidance for its current fiscal 2022 year to a range of $225 million to $235 million, which would represent 57% revenue growth over its previous fiscal year.

The second half of this year will need to be exceptionally strong for ChargePoint to reach its targets given that the company generated revenue of $97 million in the first six months of its current fiscal 2022 year.

The company did note in its most recent quarterly financial results that its residential segment saw sales grow by 79% on an annualized basis. This growth was powered by the increasing use of its charging stations at housing complexes across the U.S.

Hopefully, that growth will be sustained in the final months of this year, but it isn’t worth betting on.

Recent Acquisition

In August this year, ChargePoint announced that it is acquiring ViriCiti, a commercial fleet management provider. Acquiring ViriCiti will enable ChargePoint to sell its electric vehicle charging stations and related infrastructure to companies with major commercial fleets such as United Parcel Service (NYSE:UPS) and Waste Management (NYSE:WM).

It will also enable ChargePoint to go after lucrative government contracts as the shift to electric vehicles accelerates nationwide.

ChargePoint’s fleet segment is an area of strength for the company. In this year’s second quarter, the segment grew its sales by 187% year over year. The fleet segment has a lot of potential, but ChargePoint will have to demonstrate that it can grow that area of its business by winning competitive contracts and aligning itself with strategic partners.

ViriCiti is a step in the right direction as it will allow ChargePoint’s customers to monitor their operations data and gain valuable insights into their fleet’s performance.

Wait and See Where CHPT Goes

The electric vehicle market as a whole has cooled off this year with once high flying stocks such as Tesla (NASDAQ:TSLA) slumping. While electric vehicle companies and their stocks have a bright future, that future remains off in the distance.

ChargePoint’s time is coming but it is not here quite yet. As such, investors should wait to see where the company’s stock bottoms before taking a position.

In the current environment, and with electric vehicle adoption slow to catch on, CHPT stock is not a buy.

Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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Energy & Critical Metals

QuantumScape Partners with ‘Large Automaker’ to Evaluate Battery Prototypes — Report

California-based battery maker QuantumScape (QS) has teamed up with a large automaker to evaluate prototypes of its solid-state battery cells, according…

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California-based battery maker QuantumScape (QS) has teamed up with a large automaker to evaluate prototypes of its solid-state battery cells, according to a report published by Reuters. Shares of the company climbed over 16% to close at $24.12 on Tuesday.

Backed by Volkswagen AG (VWAGY), QuantumScape develops next-generation solid-state lithium-metal batteries for electric vehicles. As per the terms of the deal, the automaker has an option to buy battery capacity worth 10-megawatt hours from QuantumScape's pre-pilot production line facility.

When asked to identify the automaker, the company said it was a “second top ten” automaker by global revenue. (See QuantumScape stock chart on TipRanks)

Two months ago, Robert W. Baird analyst Ben Kallo reiterated a Hold rating on the stock with a price target of $26 (7.8% upside potential). The analyst expects the company to report a loss of $0.20 per share in the third quarter.

Overall, the stock has a Moderate Buy consensus rating based on 1 Buy and 2 Holds. The average QuantumScape price target of $34 implies 41% upside potential. Shares of the company have lost 62.5% over the past six months.

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The post QuantumScape Partners with 'Large Automaker' to Evaluate Battery Prototypes — Report appeared first on TipRanks Financial Blog.

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