Pod Point: Canaccord Maintains Buy Rating Despite 35% Plunge

Pod Point (LON: PODP) shares plunged over 35% on Monday following a trading update that revealed ongoing challenges in the private electric vehicle (EV) market. 

Despite the update and decline in the stock, Canaccord maintained its “Buy” rating on the company’s shares, albeit with a reduced price target from 60p to 40p.

Pod Point, which is down around 48% in the last 12 months, hit a new low of 9.7p a share in Monday’s session before closing at 10.88p. The stock is down a further 6.9% Tuesday at 10.12p.

In its trading update, Pod Point reported lower-than-expected revenues of approximately £53 million, down from its earlier guidance of around £60 million. 

The company attributed the shortfall to persistent weakness in the private new car segment of the EV market, which has impacted demand for home EV chargers. 

Canaccord noted that UK auto sales have shown growth, but private EV sales remain sluggish compared to surging fleet sales, which often do not require home chargepoints.

The firm added that domestic chargepoints provide attractive upfront cash payments, and the lower volume had a disproportionate impact on working capital,

Pod Point's adjusted EBITDA loss for 2024 is expected to be in line with guidance at around £14 million, with improved operating margins due to cost reduction initiatives and higher-than-anticipated revenues from its Energy Flex programme.

However, net cash stood at £5.3 million, below the forecast of £15 million, primarily due to increased working capital demands and the impact of a new ERP system on cash collections.

Despite the challenges, Canaccord remains positive about Pod Point's long-term prospects, keeping its bullish rating on the stock.