On Thursday, H.C. Wainwright adjusted its stance on Hive Digital Technologies (NASDAQ:HIVE), upgrading the stock from Neutral to Buy and increasing the price target to $5.00 from the previous $4.00.
The firm's reevaluation follows a notable decline in the company's share value, which dropped nearly 40% in recent weeks, compared to a 7% decline in the Nasdaq.
The analyst pointed out that Hive Digital's shares are now trading at approximately a 50% discount to its peers on an enterprise value-to-revenue basis.
This discount is perceived as excessive, and expectations are set for it to narrow as the company expands its high-performance computing (HPC) and artificial intelligence (AI) business.
The analyst highlighted the company's potential to double its HPC business's annualized revenue to $20 million in the second half of 2024, up from $10 million annualized in the second quarter. This broader strategy is to reach $100 million in annualized revenues by 2025.
To facilitate this growth, Hive Digital announced plans to convert 30 megawatts (MW) of existing capacity from BTC mining to Tier 3 data centers, supporting 20 MW of HPC GPUs.
This conversion is expected to cost approximately $5 million to $7 million per MW, significantly less than the cost of new construction.
The infrastructure retrofit, estimated to cost around $180 million, is expected to take six to nine months to complete. Once finished, it could support approximately 16,000 NVIDIA (NASDAQ:NVDA) H200 GPUs, providing Hive Digital with substantial capacity to scale its HPC operations in the coming years.
Additionally, the company is working on a new 100 MW development site in Paraguay, anticipated to be fully operational by the third quarter of 2025. Upon completion, Hive Digital expects to achieve 12.1 exahashes per second (EH/s) of total capacity with an improved fleet efficiency rating.
Hive Digital's strategic shift and investment in HPC infrastructure, alongside its ongoing mining operations, are central to the company's aggressive growth targets and the analyst's positive outlook on the stock.
The firm's upgrade and revised price target reflect confidence in Hive Digital's valuation and its prospects for scaling the HPC/AI segment of its business.
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