CoreWeave stock price target lowered to $168 by BofA on near-term overhangs

Investing.com - BofA Securities lowered its price target on CoreWeave (NASDAQ:CRWV) to $168.00 from $185.00 on Wednesday, while maintaining a Neutral rating on the AI infrastructure company’s stock. According to InvestingPro data, the company currently trades at significant premiums across multiple valuation metrics, with an EV/EBITDA ratio of 55x and a Price/Book ratio of 37x.

The price target reduction follows CoreWeave’s recent quarterly results, which BofA described as "solid" despite the magnitude of the Q2 revenue beat and Q3 guidance raise being slightly below the previous quarter’s performance. The company has demonstrated impressive momentum, with InvestingPro showing a 271.88% return over the past six months, though analysts don’t expect profitability this year.

BofA noted that CoreWeave’s backlog increased 4% quarter-over-quarter excluding OpenAI, which the firm viewed as "somewhat disappointing," though it acknowledged this figure doesn’t include a second announced expansion deal that will be reflected in Q3 results.

The investment bank cited several near-term overhangs affecting its outlook, including limited information about the status of CoreWeave’s Core Scientific deal and potential regulatory scrutiny, which BofA believes will likely remain concerns for investors.

An additional pressure point identified by BofA is the expiration of CoreWeave’s lockup period on Friday, which could put downward pressure on the company’s share price in the near term.

In other recent news, CoreWeave reported impressive second-quarter earnings, with revenue reaching $1.213 billion, marking a 23.5% increase from the previous quarter and a 207% rise compared to the same period last year. This growth was largely driven by increased demand for artificial intelligence applications. The company’s revenue exceeded the high end of its guidance by approximately $115 million, or 10 percentage points, and came in 12% above consensus estimates. Additionally, CoreWeave delivered adjusted operating margins of 16%, which surpassed consensus forecasts by 170 basis points.

Amid these developments, several analyst firms have adjusted their price targets for CoreWeave. Macquarie raised its price target to $115 from $65, citing higher earnings expectations and new infrastructure benefits. Wells Fargo also increased its price target to $105 from $60, maintaining an Equal Weight rating. Meanwhile, Morgan Stanley reiterated its Equalweight rating with a $91 price target, highlighting CoreWeave’s strong position in the GPU build-out market, bolstered by large contracts from Microsoft and OpenAI. Despite these positive earnings and analyst updates, CoreWeave’s stock saw a decline in after-hours trading.

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