On Friday, B.Riley raised the price target on Applied Blockchain Inc (NASDAQ:APLD) shares, increasing it to $9.00 from the previous target of $8.00. The firm has also reaffirmed its Buy rating for the stock. The adjustment follows a detailed evaluation of the company's 10-K filing and additional financing that was recently announced.
The analyst from B.Riley updated the valuation framework for Applied Blockchain, attributing distinct multiples to its various business segments. The Bitcoin hosting operations are now valued at $274 million, applying a 5.0x multiple. The AI Cloud sector has been assigned a $750 million valuation with a 10.0x multiple, while the High-Performance Computing (HPC) division, specifically the first 100 megawatts (MW), has been valued at $1.5 billion using a 15.0x multiple.
This new valuation reflects the analyst's belief that investors are willing to pay a premium for companies that have proven their growth potential through strong partnerships. Notably, Applied Blockchain's credibility was enhanced by investments from notable companies such as NVIDIA (NASDAQ:NVDA) and Related Companies.
The analyst's statement emphasized the significance of these strategic investments, stating, "We believe that investors put a premium on counterparty validation for the ability to re-rate on higher growth expectations. As such, NVIDIA's and Related Companies' investment in Applied has been a powerful endorsement."
The increased stock price target and sustained Buy rating indicate a positive outlook for Applied Blockchain's stock, suggesting that the company's financials and strategic partnerships are aligning to support future growth.
InvestingPro Insights
Applied Blockchain Inc (NASDAQ:APLD) has been the subject of recent attention following B.Riley's price target increase and reaffirmed Buy rating. In line with this, InvestingPro data and tips provide additional context that may be of interest to investors considering the company's prospects. With a market capitalization of $947.78 million, the company's growth narrative is supported by a striking 198.92% revenue growth over the last twelve months as of Q4 2024. This is complemented by a significant one-week price total return of 32.31%, indicating strong recent performance.
However, it's important to note that the company's stock trades with high price volatility, as reflected in the InvestingPro Tips, which may be a consideration for risk-averse investors. Moreover, the company's gross profit margin stands at 10.41%, which suggests room for improvement when compared to industry standards. Despite these challenges, the strong revenue growth and recent price performance may appeal to investors looking for high-growth opportunities.
For those seeking deeper analysis, InvestingPro offers additional insights, including the fact that Applied Blockchain's short-term obligations exceed its liquid assets and that analysts do not anticipate the company will be profitable this year. These insights are part of a broader suite of InvestingPro Tips, which includes 17 additional tips for investors looking to make a well-informed decision on APLD. Investors can access these valuable tips by visiting the InvestingPro platform for Applied Blockchain Inc.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.