Bit Digital Inc (NASDAQ:BTBT) has earned a repeat ‘Outperform’ rating from analysts at Noble Capital Markets after the company announced its acquisition of Enovum Data Centers for C$62.8 million, expanding its high performance computing (HPC) business.
Analysts see the acquisition supporting colocation expansion and synergies.
Notably, the new service offers longer contract terms (four to 12 years versus two to five) and a higher gross margin (70% to 80% versus 65% to 75%) than the current GPU Cloud service.
They see annualized earnings before interest, taxes, depreciation and amortization (EBITDA) climbing to $13 million with a potential 8MW expansion, with an additional 20MW expansion seeing EBITDA climbing further to $45 million.
“The data centers also can be extended to its GPU Cloud service through storing procured GPUs, offering capacity to customers on a just-in-time basis, or to boost margins instead of hosting third party GPUs,” they wrote in a note to clients.
“We believe the scalability and potential synergies present an exciting vertical now and in the future.”
The analysts also praised Bit Digital’s “pristine” balance sheet.
“Although roughly $40 million of cash was used for the acquisition, the company still has cash of about $64 million left with no debt,” they noted.
“With the expectation of growing the new vertical by 8MW by the end of 2Q 2025 and an additional 20MW by the end of 2025, management is looking into debt financing. Management noted that the company is in advanced talks to add debt, and we believe Bit Digital will be able to secure it to expand operations.”
In addition to maintaining their ‘Outperform’ rating, the analysts also repeated their price target of $5.50.
Shares of Bit Digital traded hands at $3.85, having surged 30% this week on the acquisition announcement.
“We believe the company offers stable cash flow through its HPC Services segment, now with a colocation service, with increased risk diversification,” they wrote. “All of this is combined with a stabilizing mining environment.”