A week ago, EVgo, Inc. (NASDAQ:EVGO) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The results overall were credible, with revenues of US$67m beating expectations by 12%. Statutory losses were US$0.10 per share, 14% below what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Taking into account the latest results, the consensus forecast from EVgo's twelve analysts is for revenues of US$255.0m in 2024. This reflects a huge 23% improvement in revenue compared to the last 12 months. Per-share losses are supposed to see a sharp uptick, reaching US$0.45. Yet prior to the latest earnings, the analysts had been forecasting revenues of US$248.2m and losses of US$0.43 per share in 2024. So it's pretty clear consensus is mixed on EVgo after the new consensus numbers; while the analysts lifted revenue numbers, they also administered a moderate increase in per-share loss expectations.

The average price target rose 8.3% to US$4.54, even thoughthe analysts have been updating their forecasts to show higher revenues and higher forecast losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on EVgo, with the most bullish analyst valuing it at US$7.00 and the most bearish at US$2.00 per share. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the EVgo's past performance and to peers in the same industry. It's pretty clear that there is an expectation that EVgo's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 52% growth on an annualised basis. This is compared to a historical growth rate of 81% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.8% annually. So it's pretty clear that, while EVgo's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at EVgo. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple EVgo analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for EVgo that you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com