On Thursday, B.Riley initiated coverage on Bit Digital Inc. (NASDAQ: BTBT) stock, a blockchain technology company, with a Buy rating and a price target set at $6.00. The firm highlighted Bit Digital's significant transformation over the past year, which includes the expansion of its graphics processing unit (GPU) business and the acquisition of Enovum Data Centers.
The analyst noted that Bit Digital has reached a $50 million run-rate in its GPU business and is projected to hit $100 million in the near term. This growth is considered to be notably ahead of its industry peers. The transition towards a high-performance computing (HPC)-centric approach is expected to bring Bit Digital's valuation in line with traditional data center companies.
Additionally, B.Riley pointed out that although Bit Digital's digital assets segment is an important aspect of the business, given its potential with higher BTC (Bitcoin) and ETH (Ethereum) prices, separating this segment in the medium term could further accelerate the company's re-rating. The firm's analysis suggests that the current market valuation of Bit Digital does not fully account for the company's strategic shift towards more stable revenue streams.
In summary, B.Riley believes that as Bit Digital continues to execute its growth plans, there is a meaningful opportunity for the company's share value to increase. The firm's positive outlook is based on the company's recent advancements and strategic moves aimed at enhancing its business model and market position.
In other recent news, Bit Digital has seen several significant developments. The company recently completed the acquisition of Enovum Data Centers for around $46 million, primarily in cash, a move that is expected to enhance the company's competitive edge and diversify its customer base. Analyst firm H.C. Wainwright has responded to this acquisition by raising its price target for Bit Digital from $6.00 to $7.00, while maintaining its Buy rating on the stock.
In terms of financial performance, Bit Digital reported a revenue of $29 million for the second quarter of 2024, reflecting a 220% increase from the same quarter last year. The company also disclosed unaudited earnings for September 2024, with a revenue of approximately $4.2 million from its AI services. However, Bit Digital's cryptocurrency mining efforts saw a slight decrease, with 51.5 bitcoins produced, marking a 3.6% decrease from August.
Bit Digital has also made key executive appointments, including Benjamin Lamson as Head of Revenue and Tom Sanfilippo as Chief Technology Officer, to bolster its high-performance computing business. Furthermore, the company has entered into a five-year agreement with Boosteroid, a cloud-based gaming provider, which is expected to generate $2.6 million annually.
These developments have led to positive projections for Bit Digital's future performance, with the company forecasting a $23 million boost to its high-performance computing revenue by the second quarter of 2025, resulting in $13 million in EBITDA. By the end of the next year, the company projects a run-rate revenue of $67 million and $48 million in EBITDA. These are the recent developments in Bit Digital's operations.
InvestingPro Insights
Recent data from InvestingPro aligns with B.Riley's optimistic outlook on Bit Digital Inc. (NASDAQ: BTBT). The company's revenue growth is particularly impressive, with a 153.87% increase over the last twelve months as of Q2 2024, and an even more striking 220.34% quarterly growth in Q2 2024. This robust growth supports B.Riley's observation of Bit Digital's significant transformation and expansion.
InvestingPro Tips highlight that Bit Digital's net income is expected to grow this year, and analysts anticipate sales growth in the current year. These projections corroborate B.Riley's positive stance on the company's future performance. Additionally, the company's strong return over the last year, with a 67.53% price total return, reflects the market's recognition of Bit Digital's strategic shifts.
It's worth noting that Bit Digital is trading at a low P/E ratio relative to its near-term earnings growth, suggesting potential undervaluation. This aligns with B.Riley's view that the current market valuation may not fully reflect the company's strategic pivot towards more stable revenue streams.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Bit Digital, providing a deeper understanding of the company's financial health and market position.
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