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On Wednesday, Cantor Fitzgerald analysts maintained an Overweight rating on Applied Blockchain Inc (NASDAQ: APLD) stock.
The revision follows Applied Digital Corp.'s disclosure of its second quarter results for fiscal year 2025, which were announced after the market closed on Tuesday.
The quarterly financial report revealed a significant development with Macquarie Asset Management (MAM), where Applied Digital Corp. secured a $5 billion perpetual preferred financing facility.
This arrangement is set to provide the necessary funding for the equity component of the construction costs for the company's 400 MW facility in Ellendale and potential additional sites.
Applied Digital Corp. is also reportedly in advanced discussions with multiple hyperscalers for leasing agreements. This shift in strategy is noted as a departure from previous communications that suggested the company was close to finalizing a lease with a U.S.-based hyperscaler.
Notably, the company did not provide a timeline for when they expect to sign a lease, which is a change from past practices.
The analysts reaffirmed the Overweight rating, expressing confidence in the ongoing demand for Applied Digital Corp.'s site. They highlighted the scarcity of high-performance computing (HPC) capacity expected to be available in 2025, which enhances the appeal of the company's facilities. According to the analyst, the site's attractiveness is bolstered by the opportunity for a customer to expand capacity with two additional buildings.
The reduction in the 12-month price target to $14 from the prior $15 target is attributed to an anticipated increase in share count and a larger net debt position. Despite the lowered price target, the analyst's underlying thesis about the company's prospects remains unchanged.
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