JPMorgan cuts Cipher Mining stock rating to Neutral

On Thursday, JPMorgan analyst Reginald Smith downgraded Cipher Mining (NASDAQ:CIFR) shares from Overweight to Neutral. The downgrade comes as the stock has fallen over 31% year-to-date, with a current market capitalization of $1.16 billion. Smith provided an analysis of the company’s operations and future prospects, noting that while Cipher Mining holds potential, there are certain challenges ahead.

Cipher Mining, traded on NASDAQ under the ticker CIFR, specializes in constructing, owning, and managing electrical infrastructure and data centers dedicated to bitcoin mining. Currently, the company operates four data centers across Texas with a total capacity of 327 megawatts (MW), which supports over 13 exahashes per second (EH/s) of mining capacity. The company has achieved revenue growth of 19% in the last twelve months, generating $151 million in revenue. Additionally, Cipher Mining is working on a new 300MW greenfield site, which is anticipated to be operational in the first half of 2025.According to InvestingPro, there are 14+ additional investment insights available for Cipher Mining, including detailed analysis of its growth prospects and financial health metrics.

The company is also branching out into building and operating high-performance computing (HPC) data centers. Despite Cipher Mining’s long-term potential and analysts expecting profitability this year, Smith pointed out that the company’s projected 2025 hashrate is only half of what other miners in JPMorgan’s coverage universe are targeting. This, coupled with the expectation that Cipher Mining will need to secure additional capital to support significant hashrate expansion beyond the first half of 2025, has led to the rating downgrade. InvestingPro’s Fair Value analysis suggests the stock is currently undervalued.

Smith also mentioned the possibility of Cipher Mining securing an HPC deal at its Barber Lake site, which could positively impact the firm’s price target. However, he cautioned that such deals can take up to nine months to negotiate and finalize.

The downgrade reflects a strategic shift by JPMorgan analysts towards deeper value operators within the coverage universe, suggesting a more cautious outlook on Cipher Mining’s near-term growth prospects in comparison to its peers.

In other recent news, Cipher Mining has been the focus of several analyst reports highlighting key developments and financial metrics. Needham adjusted its price target on Cipher Mining to $7.00 from $7.50, maintaining a Buy rating, following the company’s financial performance update that met market expectations. Meanwhile, H.C. Wainwright maintained a Buy rating with an $8.00 price target, noting Cipher Mining’s robust fourth-quarter and full-year 2024 financial results and its plans for a potential high-performance computing (HPC)/AI deal. Additionally, Rosenblatt initiated coverage with a Buy rating and a $6.50 target, emphasizing the company’s potential entry into the HPC business.

Cantor Fitzgerald revised Cipher Mining’s price target to $7 from $8, while keeping an Overweight rating, reflecting a cautious outlook amid a sector-wide devaluation and a downturn in Bitcoin prices. Keefe, Bruyette & Woods also lowered the price target to $8 from $10 but maintained an Outperform rating, citing Cipher Mining’s strategic acquisition of sites suitable for AI/HPC hosting services. The company has been actively developing a substantial power pipeline, with over 2.1 gigawatts earmarked for HPC data center development.

Cipher Mining’s Barber Lake facility, with 300 MW available and an additional 500 MW expected by 2029, is seen as a strategic asset for HPC/AI due to its power and fiber access. Analysts highlight the company’s strong fundamentals and strategic positioning in both Bitcoin mining and HPC sectors. Despite some price target adjustments, the overall sentiment remains optimistic, with analysts emphasizing Cipher Mining’s growth potential and strategic initiatives.

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