Needham cuts Cipher Mining target to $7, maintains Buy rating

On Wednesday, Needham, a well-known research firm, adjusted its price target on Cipher Mining (NASDAQ:CIFR) stock to $7.00 from the previous $7.50, while reaffirming its Buy rating on the company. Currently trading at $4.10, CIFR has experienced significant volatility, dropping nearly 32% in the past week. The revision follows Cipher Mining’s recent financial performance update, which showed revenues of $152.5 million and adjusted EBITDA of $35 million that met market expectations. According to InvestingPro data, analysts maintain a strong buy consensus with price targets ranging from $7.25 to $10.00.

The company’s earnings call centered on high-performance computing (HPC). Cipher Mining’s exclusive negotiation period with SoftBank (TYO:9984) for the Barber Lake site is concluding this week. However, Needham’s analysts pointed out that other potential tenants have shown interest in the site for some time. This interest increases the likelihood of a lease agreement being signed within the next two months. Needham has assigned a 60% probability that the Barber Lake facility will be utilized for HPC in some capacity. The company maintains a healthy financial position with a current ratio of 2.57, indicating strong liquidity to support its expansion plans.

The analysis highlighted a prevalent issue within small and mid-cap miners seeking to enter the HPC space, often referred to as a "chicken and egg" problem. Prospective customers typically seek financing before committing to a lease, whereas financiers prefer to see a customer lease in place prior to providing financing. The analysts suggest that SoftBank could play a more significant role in debt financing to help resolve this impasse.

Needham’s decision to lower the price target on Cipher Mining is primarily due to reduced expectations for the company’s 2025 adjusted EBITDA, which have been influenced by lower projected bitcoin prices. Despite this adjustment, the firm maintains its positive outlook on Cipher Mining, as reflected in the continued Buy rating. InvestingPro analysis suggests the company is currently undervalued, with analysts forecasting profitability this year. Discover 12 additional exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription, including detailed insights into CIFR’s growth potential and market positioning.

In other recent news, Cipher Mining reported a notable earnings beat for the fourth quarter of 2024, with an earnings per share (EPS) of $0.05, surpassing the forecasted loss of $0.087. The company also experienced a significant 75% increase in revenue quarter-over-quarter, reaching $42 million. Despite these positive financial results, Cipher Mining’s stock experienced a decline, reflecting mixed investor sentiment. The company’s full-year GAAP net loss was reported at $45 million, but adjusted earnings for the fourth quarter were $51 million, or $0.14 per share. H.C. Wainwright maintained a Buy rating for Cipher Mining with an $8.00 price target, highlighting the company’s strong fundamentals. Cipher Mining also announced plans to expand its high-performance computing (HPC) data center capacity, supported by a recent $50 million investment from SoftBank. The company is actively developing sites in Texas, with over 2.1 gigawatts of capacity earmarked for HPC data center development. Additionally, Cipher Mining projects a hash rate increase to 23 exahashes per second by the third quarter of 2025, indicating potential for future growth.

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