On Wednesday, Truist Securities updated its outlook on Riot Platforms (NASDAQ:RIOT), a technology-focused company, increasing the share price target to $110 from the previous $90 while maintaining a Buy rating.
The revised price target reflects an optimistic view of Riot Platforms' future, with expectations of the stock potentially doubling its value within the next two years. This projection is supported by anticipated strong free cash flow growth exceeding 20% annually from 2023 to 2025. The firm anticipates an improvement in FCF conversion from EBITDA, estimating an increase from 26% in 2022 to approximately 40% in 2023 and 50% in 2024.
Truist Securities also highlighted Riot Platforms' rapid organic growth in its AMS/DRS segments as a contributing factor to its positive assessment. The firm's analysis suggests that this momentum could play a significant role in the company's financial performance going forward.
Additionally, the firm acknowledged Riot Platforms' significant capital allocation flexibility, underpinned by a forecasted $1 billion in FCF for 2024 and 2025, which equates to roughly $12 per share. This robust financial position provides the company with various options for capital deployment which could further enhance shareholder value.
Despite these positive indicators, Truist Securities has adjusted its 2024 revenue estimate for Riot Platforms downward by 2% due to foreign exchange headwinds. Nevertheless, the firm assumes a 5% initial organic growth guidance in constant currency for 2024, which still supports a favorable outlook for the company's revenue trajectory.
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