Target Hospitality stock: Stifel reiterates Buy rating on data center potential

Investing.com - Target Hospitality (NASDAQ:TH) received a reiterated Buy rating and $11.00 price target from Stifel on Friday. The stock, currently trading at $8.84, has shown strong momentum with a 35.58% return over the past six months, though InvestingPro analysis suggests the stock is currently overvalued.

Stifel analyst Stephen Gengaro maintained the rating following meetings with Target Hospitality’s CEO Brad Archer, CFO Jason Vlacich, and Senior VP IR & Financial Planning Mark Schuck.

The analyst noted that while opportunities exist to redeploy idle assets for Government services, the majority of idle rooms will likely support data centers, potentially including new assets over time.

Stifel previously highlighted this opportunity in an upgrade note titled "Back Door Data Center Play: Upgrading to Buy with $11 Target Price," and identified new contracts from both Government and Data Center customers as key catalysts for the stock in coming quarters.

The firm’s 2026 adjusted EBITDA forecast of $95 million stands significantly above the consensus estimate of $62 million, based on Stifel’s expectation that 80-85% of the idle beds in Pecos will be contracted.

In other recent news, Target Hospitality reported its second-quarter earnings for 2025, surpassing revenue expectations with $62 million, compared to the anticipated $59.43 million. However, the company’s earnings per share fell slightly short, coming in at -$0.1223 against the forecasted -$0.11. In a strategic move, Target Hospitality has also secured a multi-year contract to provide services for a data center campus in the Southwestern United States, expected to generate $43 million in minimum committed revenue through 2027. This contract marks the company’s entry into the data center business, prompting Stifel to upgrade Target Hospitality’s stock rating from Hold to Buy, with a new price target of $11.00.

Additionally, Theratechnologies Inc. announced that its shareholders have overwhelmingly approved a plan of arrangement with CB Biotechnology, an affiliate of Future Pak, LLC. This acquisition plan received a 97.44% approval from votes cast by shareholders, including a 97.43% approval from minority shareholders. These developments indicate significant strategic shifts and financial outcomes for both companies.

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