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On Wednesday, Canaccord Genuity adjusted its outlook on Iris Energy Ltd. (NASDAQ: NASDAQ:IREN) stock, raising the price target to $15 from the previous $12, while reiterating a Buy rating. The firm's decision is based on the expected ramp-up of the company's existing operations and the potential growth from its artificial intelligence (AI) hosting services.
The analyst from Canaccord Genuity noted that the adjustments to the price target come after a review of the company's operational ramp-up. The firm has increased its target multiple to 10 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), up from approximately 8.5 times. This change reflects the firm's view of the growing inevitability of revenue increase from AI hosting services over time.
While AI hosting currently contributes only a small fraction to Iris Energy's profit and loss estimates, Canaccord Genuity expressed confidence in the company's opportunity in this area. The analyst believes that Iris Energy is well-positioned for growth in power monetization, although it is acknowledged that this journey is still in its early stages.
Iris Energy, which is traded on the NASDAQ, is being recognized for its potential in the AI hosting market. The company's strategic positioning and operational enhancements have led to a more optimistic valuation by Canaccord Genuity.
The raised price target is an indicator of the firm's belief in the company's ability to capitalize on AI hosting and the broader power monetization trend. Iris Energy's current and prospective investors may consider this development as a positive sign of the company's future performance and market potential.
In other recent news, Iris Energy has reported significant advancements in both earnings and revenue. The company noted a positive cash flow from operations at $48 million and a net profit before tax of $12 million. Iris Energy also mined 233 Bitcoin in June, with an expected increase in hash rates in the upcoming quarters. Moreover, the company's AI Cloud Services division saw a 21% revenue increase in June.
Analysts from B.Riley have adjusted Iris Energy's price target to $18.00, maintaining a Buy rating, while Cantor Fitzgerald has maintained an Overweight rating with a $23.00 price target. Iris Energy's expansion plans for 2024 are fully funded, with a cash reserve of $425.3 million and no debt.
The company's data center operations are also expanding, with 510MW expected to be operational by the end of 2024. Iris Energy's hash rate capacity is projected to surge from the current 9.4 EH/s to over 40 EH/s by mid-2025. These are recent developments, reflecting Iris Energy's commitment to driving shareholder value and positioning itself as a leading publicly listed miner.
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