Needham analyst John Todaro reiterated a Buy on Applied Blockchain, IncAPLD with a $5.50 price target.
APLD posted its Q1’FY23 results after the close yesterday.
APLD reported on the high-end of guidance for both topline and adjusted EBITDA for the quarter.
APLD’s Texas site could experience delays around regulatory approval, pushing energizing later than initially expected.
Despite some near-term, supply-side concerns, primarily on the Texas site, demand is strong, with APLD’s upcoming second North Dakota site fully contracted for 180MW.
Additionally, Todaro views HPC as an attractive opportunity set on which APLD has made progress.
The analyst said APLD is an attractive way to gain exposure to the growth in bitcoin mining without taking the underlying price risk of bitcoin, given the company’s co-hosting strategy, where revenues and expenses are generated and paid in fiat currencies.
Additionally, Applied’s relationship with Bitmain will allow it to capitalize on migrating Chinese mining capacity into North America following the country’s ban on bitcoin mining operations.
Further, the analyst expects Applied to increase prices over time with its site-level strategy to host one anchor tenant at a lower hosting rate and fill the remaining facility with higher margin, smaller tenants.
Lastly, Todaro found APLD’s valuation attractive, as he expects its shares to trade at a premium relative to prop miners, given its lower revenue volatility and lack of exposure to bitcoin’s day-to-day fluctuations.
Price Action: APLD shares traded higher by 2.98% at $1.73 on the last check Wednesday.
