Benchmark cuts Hut 8 Mining stock target to $33; maintains buy

Published 02/04/2025, 15:00
Benchmark cuts Hut 8 Mining stock target to $33; maintains buy

On Wednesday, Benchmark analysts revised their price target for Hut 8 Mining Corp. (NASDAQ:HUT) shares, decreasing it to $33 from the previous $41, while still upholding a Buy rating on the stock. Currently trading at $13.09, the stock has seen a -35% return year-to-date, though it maintains a strong overall financial health score according to InvestingPro analysis. The adjustment follows Hut 8’s recent strategic move to contribute its bitcoin mining rigs to American Data Centers, gaining an 80% interest in what is now known as American Bitcoin.

The company held a conference call today to explain the reasons behind the transaction. The primary benefits outlined were the ability to create steady, fiat-based revenue and to lower the overall cost of capital. These advantages are expected to lead to a more favorable valuation multiple for Hut 8 Mining’s shares, which currently trades at a P/E ratio of 3.49x and an EV/EBITDA of 3.01x. For deeper insights into Hut 8’s valuation metrics and growth potential, InvestingPro subscribers can access the comprehensive Pro Research Report.

The partnership with American Data Centers marks a significant shift for Hut 8, as it seeks to diversify its revenue streams beyond the volatile cryptocurrency market. By securing a substantial stake in American Bitcoin, Hut 8 aims to leverage the new entity’s capabilities to enhance its financial stability and growth prospects. The company has demonstrated strong revenue growth of 69% in the last twelve months, with a healthy gross profit margin of 47%.

The transaction, which was announced on Tuesday, signifies Hut 8’s commitment to adapting its business model in response to the dynamic nature of the cryptocurrency industry. This move is anticipated to mitigate some of the risks associated with bitcoin mining and provide a more predictable income foundation.

In summary, Benchmark’s price target adjustment reflects the latest developments at Hut 8 Mining Corp. The firm’s analysts continue to recommend a Buy rating, suggesting confidence in the company’s strategic direction and its potential to generate value for shareholders despite the reduced price target. With an Altman Z-Score of 3.03 indicating financial stability, the company appears well-positioned for its strategic transformation.

In other recent news, Hut 8 Mining Corp. reported a significant 69% year-over-year increase in revenue for Q4 2023, reaching $162.4 million. The company’s net income also saw a substantial rise, jumping to $331.4 million from $21.9 million in the previous year. Analysts at Cantor Fitzgerald maintained their Overweight rating with a $30 price target, despite a temporary decline in Bitcoin mining output due to fleet upgrades. Rosenblatt Securities initiated coverage with a Buy rating and a $23 price target, highlighting the merger with US Bitcoin as a potential driver for shareholder value. Benchmark analysts reiterated their Buy rating with a $41 target, emphasizing Hut 8’s strategic focus on AI data centers and bitcoin mining operations. H.C. Wainwright also maintained a Buy rating and $30 target, citing Hut 8’s potential AI deal as a positive catalyst. These developments reflect a strong strategic direction for Hut 8, with analysts expressing confidence in the company’s growth prospects and management’s ability to deliver on strategic plans.

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