Hut 8 Mining: Canaccord Halves Price Target To US$6.00

On May 12th, Hut 8 Mining (TSX: HUT) reported its first quarter financial results. The company saw revenues of $53.3 million, up from $31.98 million a year ago. Of that, their self-mining operations made $49.3 million of revenue on 942 Bitcoins mined during the three months compared to 539 Bitcoins mined last year. The company reported an adjusted EBITDA of $27.1 million for the quarter and earnings per share of $0.33, or a net income of $55.7 million.

The company ended the quarter with $78.5 million in cash on hand and $367.6 million of digital assets on its books, which is up from $323.95 million in digital assets on its books a year ago.

Hut 8 Mining currently has 5 analysts covering the stock with an average 12-month price target of C$10.60, or an upside of 230%. Out of the 5 analysts, 1 has a strong buy rating while the other 4 have buy ratings. The street high price target sits at C$19, or an almost 500% upside to the current stock price.

Canaccord Genuity’s note on Hut 8 Minings’ results say that a muted BTC spot price “underscores disciplined approach to exahash growth; HPC compute adds nice business model optionality.” They reiterate their buy rating on the stock but slash their 12-month price target to US$6 from US$12.

They call Hut 8 one of the largest and most diversified blockchain companies in North America, and with a hash rate of 2.54EH/s, it makes the company one of the larger North American Bitcoin miners. Canaccord also adds that they like the company’s recent TeraGo acquisition, saying, “We like the steady cash flow, uncorrelated to mining, this acquisition is providing.”

Though Bitcoin spot prices directly affects the company, Canaccord believes there is a few company-specific drivers as well as industry evolution that will help Hut 8 in the medium to long term. They believe that even with the spot price down, the long-term outlook of Bitcoin is trending higher, specifically with institutional investors. They also believe that there is some positive movement on the regulatory side of things, which would help increase institutional adoption in the space.

On the company’s results, Canaccord says that revenues declined 8% sequentially. While the company saw an increase in their mining capabilities, the lower spot price leaned on the results.

Lastly, Canaccord says that Hut 8, “has one of the more seasoned track records across the Bitcoin mining industry, having been operating in this space since 2018.”

Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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