HIVE Digital Technologies (TSX-V:HIVE, NASDAQ:HIVE) has earned a price target raise from Stifel analysts after a flurry of positive developments for the cryptocurrency mining firm have been announced over the recent weeks.
Among these updates, the companies highlighted HIVE's purchase of new generation ASIC and graphics processing unit (GPU) hardware, the acquisition of a 6 MW data center in Sweden, and the completion of its previously announced C$28.75 million financing.
“In our view, the company remains well-positioned to executive on existing and future strategic growth opportunities given about $100 million in total liquidity (cash and Bitcoin) as well as access to an existing ATM facility,” they wrote in a note to clients.
They also pointed out management’s focus on upgrading its mining fleet to about 5.6 EH’s with a 25 J/TH efficiency profile and expanding its high-performance computing (HPC) business to a target run rate of about $30 million by the second quarter of 2024 based on full utilization.
“For the sake of testing the reasonability of management's revenue projections, we performed a separate analysis by gathering quotes from several cloud GPU rental marketplaces,” they wrote. “Based on the work performed, we calculated a $27.5M run rate (middle of the range) under the assumption of an approximately 70% utilization rate. Therefore, the company could reach its targets if it realizes high utilization.”
Based on these factors, the analysts upped their price target on HIVE from $6.50 to $9 and reiterated their ‘Speculative Buy’ rating. HIVE shares traded hands at $4.57 in early trade on Friday.
“HIVE is currently trading at about 65x contracted hashrate, which represents a sizeable discount to the peer group at about 100x,” the analysts wrote.
“However, we believe a premium is warranted given near-term growth opportunities across both Bitcoin mining and HPC lines of service. We maintain our ‘Speculative Buy’ rating and raise our target price to $9 per share implying an approximately 145x contracted hashrate.”