Tuesday, Cantor Fitzgerald initiated coverage on Hive Digital Technologies (NASDAQ:HIVE) shares with an Overweight rating and a 12-month price target of $9.00. The firm highlighted HIVE's status as a top ten Bitcoin miner in terms of hash rate capacity, which currently stands at 5.5 EH/s.
Despite the company's underperformance relative to other miners, the analyst noted HIVE's strategic focus on maximizing returns from fleet investments rather than aggressively expanding at all costs.
The firm pointed out that the market has traditionally favored a growth-oriented approach, but now HIVE's shares present an appealing investment as the company is expected to more than double its hash rate in the next year. Moreover, HIVE's mining efficiency ratio is considered best-in-class, which further supports the positive outlook.
HIVE's ventures into artificial intelligence and high-performance computing (AI/HPC) were also underscored as potential drivers for investor interest. The company's GPU cloud model, HIVE Cloud, currently operates with 4,896 GPUs, generating an annual recurring revenue (ARR) of $10 million. Plans are underway to significantly expand the GPU fleet, targeting an ARR of $100 million by the end of the calendar year 2025.
Cantor Fitzgerald believes that the market is not fully appreciating HIVE's upcoming hash rate growth and its GPU cloud computing ambitions. According to the analyst, these factors make HIVE's shares attractive at their current levels.
In other recent news, Hive Digital Technologies has been the center of significant developments. The company has been upgraded from Neutral to Buy by H.C. Wainwright, citing the potential for AI-driven growth. The firm also increased the price target to $5.00, following a sharp decline in Hive Digital's share value, which is now trading at a significant discount compared to its peers.
Wainwright analysts anticipate that this discount will narrow as Hive Digital expands its high-performance computing (HPC) and artificial intelligence (AI) business. The company's potential to double its HPC business's annualized revenue to $20 million by the second half of 2024 was highlighted, with a broader strategy to reach $100 million in annualized revenues by 2025.
In alignment with these growth targets, Hive Digital announced plans to convert 30 megawatts (MW) of existing capacity from Bitcoin mining to Tier 3 data centers. This conversion is expected to cost significantly less than new construction.
Furthermore, the company is developing a new 100 MW site in Paraguay, which is projected to be fully operational by the third quarter of 2025. This expansion is central to Hive Digital's aggressive growth targets and the positive outlook from H.C. Wainwright.
Lastly, despite recent fiscal policy changes in Paraguay, Hive Digital remains committed to contributing to the country's economic growth, with its investment expected to provide significant revenue to the government-owned utility.
InvestingPro Insights
Adding to Cantor Fitzgerald's bullish outlook on Hive Digital Technologies (NASDAQ:HIVE), recent data from InvestingPro provides additional context for investors. Despite the company's strong potential in Bitcoin mining and GPU cloud computing, InvestingPro Tips highlight that HIVE is "quickly burning through cash" and is "not profitable over the last twelve months." This aligns with the company's focus on growth and investment in its mining fleet and GPU capabilities.
However, the market seems to be recognizing HIVE's potential, as evidenced by the "strong return over the last month" and "large price uptick over the last six months" noted in the InvestingPro Tips. This recent performance supports Cantor Fitzgerald's view that HIVE's shares are attractive at current levels.
InvestingPro data shows that HIVE's revenue growth stands at an impressive 43.68% for the last twelve months, which could be attributed to its expanding hash rate and GPU cloud operations. The company's market capitalization of $495.28 million suggests there's still room for growth if HIVE achieves its ambitious targets.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for HIVE, providing a deeper understanding of the company's financial health and market position.
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