UBS analysts on Monday initiated coverage of Fermi Inc (NASDAQ:FRMI, LSE:FRMI) with a ‘Buy’ rating and a 12-month target price of $30 per share, saying the data center developer is “powering the AI revolution”.
In a note to clients, the analysts wrote that a key upcoming catalyst for its stock is the conversion of the letter of intent with its first tenant into a firm lease by year end 2025, which is expected to generate annualized revenue of $1.5 billion.
They noted that other near-term catalysts include an agreement with Xcel for initial grid power and delivery of gas turbines.
The analysts believe Fermi’s achievement of these key milestones will lower the risk premium and drive its stock price higher.
The company, which is developing the largest single power source for AI, plans to build 11 gigawatts (GW) of generation (five natural gas and six nuclear) with the first GW coming online in 2026.
Fermi shares slipped 1.7% to $23.14 in midday trading on Monday.