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On Tuesday, Canaan Inc . (NASDAQ:CAN) received a new Buy rating from Compass Point, with a price target set at $2.50. Currently trading at $1.07, the stock has seen significant volatility with a 52-week range of $0.72 to $3.27. According to InvestingPro data, the stock has declined nearly 48% year-to-date, reflecting the challenging market conditions. The research firm’s initiation of coverage comes after Canaan’s shares had previously fallen from over $3.00 in December 2024.
The analyst at Compass Point cited discounted valuation assumptions and conservative estimates compared to the company’s own guidance as the basis for the new rating. The firm considers Canaan’s stock a very high risk/reward opportunity in the wake of the recent sell-off. This assessment aligns with the company’s high beta of 3.4 and current market capitalization of $339 million. InvestingPro analysis reveals that while Canaan maintains more cash than debt on its balance sheet, with a healthy current ratio of 2.03, the company faces profitability challenges with negative EBITDA of $172 million in the last twelve months.
The valuation for Canaan is derived from a sum of the parts analysis, focusing on the company’s Bitcoin (BTC) mining ASICs and its BTC Self Mining operations. Compass Point’s ASIC valuation is based on a roughly 7x EV/EBITDA on their CY26 estimates, which is seen as a conservative reflection of the uncertainties surrounding ASIC pricing and Canaan’s capital structure and balance sheet.
For Canaan’s BTC mining, the CY26 estimate of $70 million assumes hash prices of approximately 4.5 cents and an average hash rate of 12 EH/s, acknowledging the limited visibility in this sector.
The price target of $2.50 represents Compass Point’s confidence in Canaan’s potential despite the high-risk nature of the investment and the recent downturn in share price from the highs experienced in late 2024. The firm’s analysis suggests a potential upside for investors willing to engage with the stock under the current market conditions.
In other recent news, Canaan Inc. has reported several significant developments that may interest investors. The company has projected its revenues for the fiscal year 2025 to be between $900 million and $1.1 billion, with expectations of generating $150 million to $200 million from self-mining revenue. Additionally, Canaan has secured $100 million in preferred share financing from an institutional investor, with plans to receive an additional $100 million soon. These funds are intended to support the company’s growth, including research and development and expansion of production capabilities.
Rosenblatt Securities has maintained a Buy rating for Canaan, raising the stock’s price target to $8.00, reflecting confidence in the company’s revenue outlook. The company’s management has also outlined plans to purchase ASICs from Samsung (KS:005930), using $200 million from Series A-1 Preferred Shares financing to meet product demand in the latter half of 2025. In terms of production, Canaan reported an increase in Bitcoin production for both January and February 2025, although specific figures were not disclosed. These updates indicate Canaan’s ongoing efforts to strengthen its position in the cryptocurrency mining sector.
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