This under-the-radar EV charging stock could soar by 60%, Bank of America says
Bank of America doubled down on its buy rating for electric vehicle charging company Wallbox and expects its shares to rise by more than 60% over the next 12 months to $5.5 a share. The Barcelona-based company manufactures home electric vehicle chargers and public charging systems for the North American and European markets. However, the bullish outlook from the investment bank’s analysts comes with a downward revision for its price target from $8 a share. The stock trades on the New York Stock Exchange and has declined by 70% over the past year. It was trading at $3.40 a share at Monday’s close. According to the bank’s analysts, one of the biggest sticking points for the share’s poor performance has been the high inventory levels at distributors of the company’s products. The company’s management has addressed the issue and said that stock levels will likely return to normal in the second half of the year. WBX 5Y line Bank of America analysts also pointed toward other green shoots for the company. Marianne Bulot, Bank of America’s equity analyst, said Wallbox had raised its profit margin by 90 basis points in the first quarter of this year despite a challenging trading environment. “We think gross margin could further rebound by the end of 2023 … with new products sales accelerating and better production costs management,” she said in a research note to clients on May 5. The company delivered 45,000 charging units in the first quarter of this year, compared to 48,000 in the fourth quarter of last year. Despite declining quarterly figures, the company reported 24% annual revenue growth. Wallbox has also historically outperformed its peers, growing by 100% in 2022 compared to 23% for the market as a whole. While growth has slowed this year, the problem isn’t unique to Wallbox, according to the investment bank. For example, the bank added that growth has slowed due to slower adoption of electric cars amid supply chain disruption. Bulot also expects the company’s fundamentals to be in better shape in the second half with the release of its new 150-kilo-watt and 180-kilo-watt superchargers. Bank of America estimates that Wallbox has begun manufacturing these units and will benefit from U.S. subsidies in the Inflation Reduction Act. “We see outperformance vs the market, and U.S. positioning in particular should drive 75% [per annum] revenue growth to 2025,” said Bulot. “Wallbox is one of the few manufacturers planning U.S. production capacity for 350kW+ chargers to meet big U.S. political ambitions for a national fast charging network. Our Buy [rating] is predicated on growth and gross margins well above peers and the differentiated U.S. market position.”
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