On Wednesday, Cantor Fitzgerald adjusted its financial outlook for Terawulf Inc. (NASDAQ: NASDAQ:WULF), raising the price target to $9.00 from the previous $7.00, while keeping an Overweight rating on the stock. The revised target follows a series of events that bolstered the firm's confidence in the company's prospects.
The firm's optimism grew after two days of events, beginning with a dinner with Terawulf's management team on Monday and followed by a Tuesday tour of the company's Lake Mariner facility in upstate New York. The management team, including CEO Paul Prager and COO Nazar Khan, revealed the availability of additional power capacity at the Lake Mariner site, which was previously undisclosed information to the analysts.
Terawulf's management also indicated that they could secure similar deal terms to those of CORZ/CoreWeave, a sentiment echoed by the analysts due to Terawulf's superior location and infrastructure. The company is actively engaging with major industry players such as NVDA, ORCL, INTC, AMD (NASDAQ:AMD), and other significant GPU players, mapping out long-term strategies for data center design and construction.
The analyst's report suggests robust demand from various sectors, including hyperscalers, large enterprises, private GPU cloud services, and emerging AI companies. Contracts for Terawulf's 20 MW building, expected to be operational by year-end, and its 50 MW facility, anticipated for the second quarter of 2025, are likely to be announced before the end of the year.
Looking ahead, Cantor Fitzgerald anticipates that within four years, Terawulf could achieve 570 MW of AI/High-Performance Computing (HPC) capacity, translating to approximately 500 MW of take-or-pay capacity and potentially generating $500 million in earnings before tax (EBT).
With Terawulf's current valuation at $1.6 billion, the firm sees significant upside potential, leading to the increased price target. The new target reflects a 60% weighting applied to the estimated value of Terawulf's infrastructure, up from the previous 50%.
In other recent news, Terawulf Inc. has seen significant developments.
B.Riley has raised the price target for Terawulf shares to $5.00, citing the company's potential to leverage High-Performance Computing (HPC) and the strategic value of its Lake Mariner facility.
In terms of financial performance, Terawulf reported robust growth in the first quarter of 2024, with GAAP revenues reaching $42.4 million, an 82% increase from the prior quarter, and a non-GAAP adjusted EBITDA of $32 million, up 95% from the previous quarter. The company's self-mining hash rate stood at 8 exahash per second using 210 megawatts of infrastructure capacity. Terawulf also plans to expand its infrastructure capacity to 300 megawatts by the end of 2024.
Terawulf has outlined ambitious expansion plans, with the completion of 'Building 4' at its Lake Mariner site slated for the second half of 2024. The company is also actively exploring opportunities in high-performance computing and AI applications, with plans to expand its high-density compute business to 100 megawatts.
InvestingPro Insights
InvestingPro data underscores the dynamic financial landscape surrounding Terawulf Inc. (NASDAQ: WULF). With an impressive revenue growth of 280.01% over the last twelve months as of Q1 2024, the company's expansion trajectory is evident. This growth is complemented by a substantial 1-year price total return of 184.02%, highlighting the strong investor confidence Terawulf has garnered.
However, it's important to note that the company is currently trading at a high Price / Book multiple of 6.09, which could suggest a premium valuation compared to the book value of its assets. Additionally, the market capitalization stands at $1.6 billion, aligning with Cantor Fitzgerald's valuation. The robust price performance is also reflected in the stock trading at 94.12% of its 52-week high, suggesting a positive market sentiment.
Among the InvestingPro Tips, two particularly stand out. The first is that analysts do not anticipate the company will be profitable this year, which is a crucial consideration for potential investors. The second tip indicates that the stock's Relative Strength Index (RSI) suggests it is in overbought territory, which may imply a potential pullback or consolidation in the near term.
For those looking to delve deeper into Terawulf's financials and future outlook, InvestingPro offers additional insights. By using the exclusive coupon code PRONEWS24, readers can receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription and gain access to over 15 additional InvestingPro Tips to inform their investment strategies.
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