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On Friday, BTIG initiated coverage on Iris Energy Limited (NASDAQ: IREN), currently trading at $11.41 with a market capitalization of $2.45 billion, with a Buy rating and set a price target of $22.00.
The firm highlighted the company's position as a vertically integrated bitcoin miner, with approximately 28 exahashes (EH) of installed hashing capacity, which translates to about 3.6% of the market share. Iris Energy operates around 460 megawatts (MW) of power infrastructure in North America. According to InvestingPro analysis, the stock appears to be trading below its Fair Value, with analyst targets ranging from $15 to $26.
BTIG pointed out that Iris Energy is in the process of expanding its capacity by approximately 350MW, which is expected to be completed in the first half of 2025. This expansion could increase the company's hashing capacity to around 50 EH, potentially raising its market share to approximately 6%.
The company has demonstrated strong growth potential, with InvestingPro data showing impressive revenue growth of 119.92% and industry-leading gross profit margins of 87.67%. The analyst noted that while Iris Energy currently offers AI Cloud Services, which account for about 6% of its revenue, a significant high performance computing (HPC) contract might be more likely once the Sweetwater, Texas facility starts up in the second quarter of 2026.
The company has secured around 2.3 gigawatts (GW) of contracted power across Texas and Canada, with plans to add an additional 1.8GW over the next two to three years. This growth, coupled with the increasing demand for prompt power by hyperscalers, could present opportunities for Iris Energy to secure HPC contracts. The firm also observed that Iris Energy entered the AI Cloud Services space in the first quarter of 2024, investing in approximately 1,900 GPUs at a cost of around $80 million, and began leasing out this capacity.
BTIG concluded its analysis by emphasizing Iris Energy's competitive position, noting that the company is near the low end of the cost curve. Additionally, the firm remarked on the efficiency of Iris Energy's mining fleet and its substantial contracted power capacity in Texas, which may enable it to secure HPC work in the future.
For deeper insights into Iris Energy's financial health, growth prospects, and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro, which offers exclusive metrics and expert analysis for over 1,400 US stocks.
In other recent news, IREN Ltd. has seen its share target raised by Compass Point due to its strong mining capacity. The company also reported a significant increase in its installed capacity, with a growth in hash rate expected by year-end. JPMorgan, however, downgraded Iris Energy's stock from Overweight to Neutral, though the price target was increased. Analysts at Canaccord Genuity and Cantor Fitzgerald maintained bullish ratings for the company, emphasizing its low-cost Bitcoin production and increased hash rate capacity.
Iris Energy also announced plans for a $300 million convertible senior notes offering due in 2030, intending to use the proceeds for general corporate purposes and working capital. The company is expanding its operations, aiming to reach 50 EH/s in Bitcoin mining and increase its data center capacity to 810MW by 2025. The first quarter of fiscal year 2025 showed strong financial performance, with an adjusted EBITDA of CAD 2.6 million, Bitcoin mining revenue of CAD 54.3 million, and AI cloud services revenue of $3.2 million.
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