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Investing.com - HSBC maintained its Reduce rating and $32.00 price target on CoreWeave (NASDAQ:CRWV) on Wednesday, expressing concerns about the company’s future margin performance. The stock, currently trading at $122.40, sits between analyst targets ranging from $32 to $185, according to InvestingPro data.
The investment bank’s non-GAAP EPS estimates for CoreWeave are approximately 45% below consensus expectations, highlighting a significant gap in performance projections. This caution appears warranted, as InvestingPro data shows the company reported negative earnings of $5.19 per share in the last twelve months, with analysts not expecting profitability this year.
HSBC noted that while consensus forecasts anticipate non-GAAP EBITDA margin expansion of more than 7 percentage points to 70% by the fourth quarter of 2025, the bank expects margins to decline to 60.4% in the second half of 2025, down from 62.6% in the second quarter of 2025, primarily due to lower utilization of data center assets.
The bank questioned long-term margin improvement potential, stating that key costs such as data center rent and power, which currently represent approximately 21-22% of revenue, are unlikely to decline significantly in the future.
HSBC also challenged consensus expectations that CoreWeave’s implied interest rate would decrease to 8.1% by 2028 compared to 10.7% in the second quarter of 2025 (approximately 11.3% after adjusting for capitalized interest cost), describing this outlook as "too optimistic."
In other recent news, CoreWeave reported impressive financial results for the second quarter of 2025, with revenue reaching $1.21 billion. This marks a 23.5% increase from the previous quarter and a remarkable 207% rise compared to the same period last year, driven by heightened demand for artificial intelligence applications. Despite the strong earnings, Goldman Sachs maintained a Neutral rating on the stock. Analysts from Wells Fargo also raised their price target for CoreWeave to $105 from $60, acknowledging the company’s revenue exceeding guidance by $115 million. Macquarie increased its price target significantly to $115 from $65, citing higher earnings expectations and future infrastructure benefits. Meanwhile, BofA Securities adjusted its price target to $168 from $185, noting solid quarterly results but slightly lower revenue beats and guidance raises. H.C. Wainwright reiterated its Neutral rating amid the AI demand surge. These developments highlight CoreWeave’s strong performance and the varied analyst outlooks on its future prospects.
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