Craig-Hallum upgrades Core Scientific stock to Buy on AI data center value

Investing.com - Craig-Hallum upgraded Core Scientific Inc. (NASDAQ:CORZ) from Hold to Buy and set a price target of $27.00 on Friday. The stock, currently trading at $22.00, sits just below its 52-week high of $22.12 and has delivered an impressive 156% return over the past six months, according to InvestingPro data.

The upgrade reflects a shift in market sentiment toward Bitcoin-to-AI infrastructure companies like Core Scientific, with investors now more willing to assign REIT-type valuations to AI data center deals and consider power pipeline value.

Craig-Hallum values Core Scientific’s 590 MW in leases with CoreWeave at approximately $12 billion, representing over $20 per share, based on a 75% NOI margin and approximately 5% cap rate while accounting for the capital expenditure structure.

The firm’s valuation model includes an 80% probability of Core Scientific signing an additional 70 MW capacity lease expected to come online in fiscal year 2026 alongside the CoreWeave sites.

Craig-Hallum also applies a 30% probability to the company securing the planned 500 MW capacity for fiscal year 2027, with appropriate discounting to account for contracting and construction timelines. While InvestingPro data shows Core Scientific isn’t currently profitable, analysts expect the company to turn profitable this year. Investors should note that CORZ appears overvalued compared to its Fair Value, with earnings results due on November 6.

In other recent news, Core Scientific, Inc. announced the termination of its merger agreement with CoreWeave, Inc. after failing to secure the necessary shareholder approval. This decision followed a special meeting where stockholders did not provide the requisite votes to proceed with the merger. Core Scientific plans to report the final voting results in a Form 8-K filing with the U.S. Securities and Exchange Commission. Prior to the vote, investment firm Two Seas Capital LP, a significant shareholder, had urged investors to reject the merger, arguing that the proposed offer undervalued Core Scientific. Jefferies, maintaining a Buy rating on Core Scientific, raised its price target for the company to $24.00, noting that the stock traded at a premium to the implied deal price. These developments reflect the latest investor sentiment and strategic decisions impacting Core Scientific.

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