In a research note, broker Craig-Hallum upgraded the stock to buy, stating that Hut 8 (HUT), a bitcoin miner, has significant money to explore future projects due to its stack of over 9,100 coins. Approximately 75% of the company’s present market capitalization is attributed to its bitcoin holdings, which the analyst team lead by George Sutton stated “represents both a protective feature for investors and very opportunistic capital for the business to use for growth.”
The analyst kept its $12 price target but upgraded its Hut 8 recommendation from hold to buy. Following earnings, the shares closed nearly 13% higher at $8.83 on Wednesday, helped by a significant increase in the price of bitcoin (BTC).Thursday’s early trading saw a 2% increase in shares.
“Over the past 18 months, we have maintained a cautious view of HUT, considering its challenges with mining operations, contracts, strategy and management,” Sutton and team wrote, adding that with these issues being addressed the “potential for growth and stock appreciation far outweighs the risks.”
“We are particularly optimistic about the company’s strategic partnerships with key energy providers and its progress in the regulatory inquiry process, which we believe will further enhance its potential,” they added.
According to the research, the company has prospects in high performance computing (HPC) and artificial intelligence (AI) in addition to bitcoin mining. It also mentioned that HUT is set to enter the AI services market later this year, with a projected $20 million in yearly revenue from this contract. The broker also mentioned that the Validus assets—four natural gas power plants in Ontario that the previous management team had purchased—will prove to be an additional source of funding. According to the company’s first-quarter results report released yesterday, net income increased to $250.9 million from $17.3 million in the previous year.