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On Monday, Compass Point analyst Chase White reaffirmed a Buy rating on shares of Core Scientific Inc . (NASDAQ:CORZ) with a steady price target of $20.00, well above the current stock price of $6.87. White provided an in-depth analysis of the company’s CoreWeave business model, focusing on unit economics to evaluate credit risk and the opportunities presented by CoreWeave and Neocloud. The analyst expressed confidence in the fundamentals and valuation of Core Scientific, suggesting a significant disparity between the current market perception and the company’s actual performance. According to InvestingPro data, analyst targets range from $17 to $24, reflecting strong institutional confidence despite the stock’s recent 23% decline over the past week.
Core Scientific announced on February 26, 2025, that it had extended its CoreWeave contract, which includes additional terms for 70MW at its Denton facility. This expansion brings the total contracted high-performance computing (HPC) megawatts to approximately 590MW across six sites. The extended contract is expected to generate over $10 billion in cumulative revenue from CoreWeave over a 12-year period, with options for two additional 5-year extensions. This significant contract expansion comes as the company maintains strong liquidity, with InvestingPro data showing a healthy current ratio of 6.72, indicating robust ability to meet short-term obligations.
The contract extension is anticipated to provide industry-leading net operating income (NOI) yields of approximately 30% in the first two years, with discounts, and around 70% at standard run rates thereafter. These favorable terms are believed to adequately compensate Core Scientific for the credit risk associated with CoreWeave. The company’s current EV/EBITDA ratio of 24.86x reflects the market’s premium valuation of its growth potential. For deeper insights into Core Scientific’s valuation metrics and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.
Additionally, Core Scientific retains a significant pipeline of over 1GW for potential future deals and further customer diversification. The analyst highlighted that current valuations, which range between 20-30% capitalization rates and 4-6 times enterprise value to EBITDA (EV/EBITDA) on contracted HPC revenues, present a strong contrarian buying opportunity. This is especially relevant given the prevailing market sentiment and the impending CoreWeave initial public offering (IPO), which is expected to occur within the next three weeks. White anticipates that Core Scientific’s stock has considerable potential for an increase in value within the year, a view supported by the company’s strong 93% return over the past year despite recent market volatility.
In other recent news, Core Scientific Inc. reported a decrease in its Bitcoin mining productivity and revenue for February, mining an average of 7.7 Bitcoins per day compared to 8.3 in January. This reduction, along with a slight decrease in the company’s energized hash rate, resulted in estimated February revenue of $20.6 million, down from $25.5 million in January. Analyst Brett Knoblauch from Cantor Fitzgerald responded by lowering the firm’s price target for Core Scientific shares to $20.00 from $21.00, though he maintained an Overweight rating. Despite these challenges, Core Scientific continues to focus on growth, appointing Jim Nygaard as the new Executive Vice President and Chief Financial Officer. Nygaard, with extensive experience in investment banking, is expected to drive growth and shareholder value. Additionally, the company reported a challenging fourth quarter of 2024 with a 33% year-over-year revenue decline to $94.9 million and a net loss of $265 million. However, successful restructuring efforts have left Core Scientific with a strong cash position and reduced debt, highlighting investor optimism about future growth potential.
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