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On Monday, Compass Point increased its price target for Terawulf Inc. (NASDAQ:WULF) to $6.50 from the previous target of $6.00, while reaffirming a Buy rating on the company’s shares. Currently trading at $3.46, the stock has shown significant volatility with a beta of 4.15, according to InvestingPro data. While the stock has experienced a 35% gain over the past year, it remains below its 52-week high of $9.30. The adjustment follows Terawulf’s recent update on its high-performance computing (HPC) outlook. The company anticipates the 2.5MW WULF Den to come online in the second quarter of 2025, the 20MW CB-1 building in the third quarter, and the 50MW CB-2 during the fourth quarter of the same year.
Terawulf has also revised its previous guidance for lease economics, now expecting $1.6 million per megawatt with an annual escalator of 3%, which is projected to result in a lease rate of $2 million per megawatt by the eighth year. The company is scaling up to 60MW and expects to maintain 75% EBITDA margins. InvestingPro analysis reveals the company has achieved a robust gross profit margin of 44.89% in the last twelve months, though it’s currently burning through cash with negative free cash flow. Discover 12 additional key insights about WULF with an InvestingPro subscription, including detailed financial health scores and Fair Value estimates. However, it foresees higher build costs of approximately $7.2 million per megawatt per critical IT load, leading to initial net operating income yields of around 16.5%.
In the realm of Bitcoin mining, the firm has lowered its estimates to $42 million for calendar years 2025 and 2026. This reflects increased SG&A guidance and a return to normalized power prices of $0.05 per kWh. Compass Point analysts highlight the closing of Project Financing as a potential catalyst for Terawulf, with the official launch expected to commence this week. They model the company to secure approximately 70% loan-to-cost financing at 8% interest rates, though they suggest there could be better terms available due to G42’s signed parent guarantee of Core42 and Sovereign Wealth backing.
The analysts believe Core42 is a strong tenant with minimal credit risk, which is considered in the valuation using discount rates and capitalization rates. With a focus on delivering signed 60MW HPC capacity, Terawulf is expected to either sign additional capacity to Core-42 or enhance its position among enterprise customers, where demand is growing. Notably, Terawulf has increased its share buy-back program.
The revised price target of $6.50 reflects the anticipated run-rate HPC megawatts of approximately 200MW IT Load at $1.65 million per megawatt, with 75-80% gross margins benefiting from the escalator, discounted by 10% to 2026. With a market capitalization of $1.33 billion and revenue growth of 31.85% year-over-year, WULF maintains a healthy current ratio of 1.9. For comprehensive analysis of WULF’s valuation and growth prospects, access the detailed Pro Research Report available exclusively on InvestingPro, part of our coverage of over 1,400 US stocks. This valuation also factors in a 15.5-16 times multiple, less the equity portion, less the prepay portion of capital expenditures, and less the net debt projected for the calendar year 2025.
In other recent news, Terawulf Inc. reported disappointing financial results for the first quarter of 2025, with earnings and revenue falling short of analysts’ expectations. The company posted an earnings per share of -$0.16, which was below the forecasted -$0.04. Additionally, revenue was reported at $34.4 million, missing the anticipated $46.07 million. This performance highlights ongoing financial challenges for Terawulf, as they continue to pursue strategic growth through expanding power capacity and developing high-performance computing infrastructure. The company reported a significant net loss of $61.4 million for the quarter, compared to a $29.2 million loss in the previous quarter. Despite these setbacks, Terawulf maintains a cash position of $218 million, which may provide some buffer as they navigate these challenges. Analysts have not provided any new upgrades or downgrades for Terawulf, but the company’s future plans include project financing for its Core 42 build-out, with potential impacts from tariffs on build costs. These developments underscore the complex landscape Terawulf is navigating in its pursuit of growth and stability.
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