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Tuesday, Citi analysts began coverage on CoreWeave (NASDAQ:CRWV) shares, assigning a Neutral rating and establishing a price target of $43.00. The stock, currently trading at $35.42, has experienced significant volatility, with a 13% decline in the past week. CoreWeave, a provider of GPU-as-a-Service (GPUaaS) specializing in artificial intelligence (AI) infrastructure, has seen a significant revenue increase forecasted at $4.6 billion for FY25, marking a 140% growth. The company demonstrated impressive revenue growth of 737% in the last twelve months, though InvestingPro data shows it’s currently burning through cash rapidly.
The company’s rapid expansion has been largely attributed to robust demand from a few key customers, with Microsoft (NASDAQ:MSFT) accounting for 64% of CoreWeave’s FY24 revenue, alongside contributions from OpenAI. Despite acknowledging CoreWeave’s impressive growth trajectory and its first-mover advantage in the market, Citi analysts express caution, suggesting that the stock may not see much movement in the near term.
The analysts point to a successful initial offering, which was then followed by uncertainties related to tariffs as reasons for their tempered expectations. The price target set by Citi implies a 13 times multiple on the company’s projected FY26 enterprise value to EBIT. Currently, CoreWeave maintains a high gross profit margin of 74%, though InvestingPro analysis reveals 12 additional key insights about the company’s financial health and market position that could influence investment decisions.
Citi’s neutral stance reflects a balanced view of CoreWeave’s prospects, weighing the company’s strong growth against potential risks and market variables that could influence the stock’s performance. The analysts’ commentary provides insight into the rationale behind the established price target and rating, serving as a gauge for investors monitoring CoreWeave’s financial progress and market positioning.
In other recent news, CoreWeave has been the focus of several analysts’ reports, highlighting its financial and market positioning. Stifel analysts initiated coverage with a Buy rating and set a price target of $55, emphasizing CoreWeave’s role in the expanding AI compute infrastructure market. Jefferies also issued a Buy rating with a $51 price target, citing the company’s robust positioning to meet the growing demand for AI compute capabilities. Barclays (LON:BARC) provided an Overweight rating and a $48 target, noting CoreWeave’s potential in the genAI optimized Infrastructure-as-a-Service space, supported by a projected 68% revenue compound annual growth rate from 2024 to 2027.
Goldman Sachs, however, took a more cautious stance with a Neutral rating and a $54 price target, pointing out the challenges CoreWeave faces due to its short operating history and concentrated revenue streams from major customers like Microsoft and Nvidia (NASDAQ:NVDA). Morgan Stanley (NYSE:MS) mirrored this cautious approach with an Equalweight rating and a $46 target, highlighting the risks associated with CoreWeave’s high debt load and customer concentration.
The reports collectively underscore CoreWeave’s rapid growth and strategic partnerships, such as with Nvidia, which are seen as crucial for its success in the competitive GenAI market. However, analysts also noted the significant debt levels and the need for CoreWeave to diversify its customer base to mitigate risks. These recent developments indicate that while CoreWeave has promising growth prospects, it must navigate financial and operational challenges to sustain its market position.
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