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On Wednesday, Citi analyst Tyler Radke increased the price target for CoreWeave (NASDAQ: CRWV), a high-growth tech company, from $43.00 to $94.00, while keeping a Neutral rating on the stock. The adjustment followed CoreWeave’s robust performance in the first quarter, which surpassed revenue expectations by 15 percentage points and provided guidance for the second quarter and full year of 2025 that was higher than analysts’ predictions by 9 and 8 points, respectively. The company, currently valued at $43.3 billion with trailing twelve-month revenue of $2.71 billion, has shown impressive momentum with a 74.28% gross margin. According to InvestingPro analysis, the stock appears overvalued at current levels, with 20 key insights available for subscribers.
Despite the positive revenue numbers, the company’s results were mixed. CoreWeave’s remaining performance obligations (RPO) and capital expenditures (capex) did not meet first-quarter estimates, and the company saw weaker margins and net income. The company’s current ratio of 0.44 indicates potential liquidity challenges, while negative free cash flow suggests significant cash burn. Radke noted that the results solidified CoreWeave’s status as a high-growth entity, particularly in light of a recent $4 billion expansion deal with OpenAI. The analyst believes that this deal has likely alleviated investor worries regarding a slowdown in AI-related capital expenditures and infrastructure investments.
CoreWeave’s shares have experienced a significant surge, increasing 126% from their lows. Radke suggested that while the market’s reevaluation of the stock may be partially warranted due to strong numbers from Azure and other hyperscalers, as well as increased capital expenditures, Citi is maintaining its Neutral/High Risk rating. The firm is looking for more signs of profitability and customer diversification before changing its stance. Get deeper insights into CoreWeave’s valuation metrics and growth potential with a comprehensive Pro Research Report, available exclusively on InvestingPro.
The raised estimates are now at the high end of the company’s guidance, with a focus on growth for the fiscal year 2025 at the expense of profitability. Due to stronger overall industry demand and capital expenditures, Citi has reduced its valuation discount by 20%. With the higher growth estimates, the new target price is set at $94, which corresponds to 18.2 times the projected enterprise value to earnings before interest and taxes (EV/EBIT) for the fiscal year 2026. Currently trading at an EV/EBITDA multiple of 36.55x and a price-to-book ratio of 22.72x, these premium valuations reflect the market’s high growth expectations.
In other recent news, CoreWeave has announced a $1.5 billion senior notes offering due 2030, with proceeds earmarked for general corporate purposes, including debt repayment. Moody’s has assigned CoreWeave a Ba3 corporate family rating, while S&P Global Ratings and Fitch Ratings have given the company ’B+’ and ’BB-’ issuer credit ratings, respectively. The ratings reflect CoreWeave’s strong market position and robust revenue growth, but also highlight concerns regarding high financial leverage and customer concentration. CoreWeave’s revenue is projected to grow significantly, with Moody’s estimating around $6 billion for year-end 2025, and Fitch expecting $5.5 billion in FY2025. Additionally, Needham analysts have raised their price target for CoreWeave shares to $75, maintaining a Buy rating, following the company’s recent 10-Q filing. Despite the positive outlook, analysts have noted potential risks associated with CoreWeave’s capital-intensive business model and reliance on a few key customers. CoreWeave continues to expand its AI and cloud computing capabilities, leveraging partnerships with companies like Nvidia (NASDAQ:NVDA) to secure long-term contracts.
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