Broadcom named strategic vendor for Walmart virtualization solutions
On Tuesday, Compass Point initiated coverage of Canaan Inc . (NASDAQ:CAN), a firm specializing in blockchain and artificial intelligence technology, with a Buy rating and a price target of $2.50. The new rating comes after a period of decline for Canaan’s shares, which had previously traded above $3.00 in December 2024. Currently trading at $1.07, the stock has experienced a significant 47.8% decline year-to-date, according to InvestingPro data. With a beta of 3.4, the stock exhibits notably higher volatility than the broader market.
The research firm’s analyst cited discounted valuations and conservative estimates relative to the company’s own guidance as the basis for the optimistic outlook. According to Compass Point, Canaan presents a very high risk/reward opportunity, especially in the wake of the recent sell-off. InvestingPro analysis supports this view, showing the company maintains a healthy balance sheet with more cash than debt and a current ratio of 2.03, though it’s currently experiencing rapid cash burn.
The price target and rating are grounded in a sum of the parts analysis that includes both Canaan’s ASIC valuation and its self-mining of Bitcoin (BTC). The valuation of Canaan’s ASIC business is pegged at approximately 7 times the enterprise value to EBITDA based on the firm’s 2026 estimates. This multiple is seen as a discounted valuation, reflecting the uncertainties surrounding ASIC pricing and Canaan’s capital structure and balance sheet. According to InvestingPro’s comprehensive analysis, which includes over 30 financial metrics and key insights, the company’s overall financial health score is currently rated as "Weak," with particularly concerning gross profit margins of -57.5%.
For Canaan’s Bitcoin mining operations, Compass Point’s 2026 estimate of $70 million assumes hash prices of approximately 4.5 cents and an average of 12 EH/s, acknowledging the limited visibility into future market conditions.
The rating reflects a cautious yet optimistic stance on Canaan’s future performance, considering the volatility of the cryptocurrency market and the challenges inherent in the sector. Canaan’s stock price and market response to the new coverage and price target will be closely watched by investors and industry observers alike.
In other recent news, Canaan Inc. has reported increased Bitcoin production for both January and February 2025, although specific production figures were not disclosed. The company also filed preliminary financial results for the fourth quarter of 2024, indicating continued growth in its cryptocurrency mining operations. Additionally, Canaan secured $100 million from an institutional investor as part of a Series A-1 Preferred Shares financing agreement, with plans to receive an additional $100 million subject to certain conditions. These funds are intended to support research and development, production scale expansion, and other corporate purposes.
Rosenblatt Securities maintained a Buy rating on Canaan with an $8 price target following discussions with company executives, who expressed optimism about the demand for their A15 Bitcoin Mining equipment. Compass Point also initiated coverage with a Buy rating and a $2.50 price target, citing discounted valuation assumptions and conservative estimates. Canaan has upheld its revenue forecast for 2025, projecting between $900 million and $1.1 billion, including expected self-mining revenue. The company’s strategic use of funds and management’s confidence reflect a focus on expanding product demand and maintaining a strong financial outlook amidst the volatile cryptocurrency market.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.