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Applied Blockchain maintains Buy rating, price target after earnings beat

EditorNatashya Angelica
Published 29/08/2024, 14:06
APLD
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On Thursday, H.C. Wainwright maintained its positive stance on shares of Applied Blockchain Inc (NASDAQ:APLD), reiterating a Buy rating and a price target of $5.00. The firm acknowledged the company's impressive financial performance, as Applied Digital reported earnings of $43.3 million for the quarter, surpassing both the previous quarter's $40.3 million and the market's expectation of $37.6 million.

The performance was noted despite the challenges faced, including downtime at the Ellendale site, which is known for hosting significant U.S. bitcoin mining operations.

The results announced on Wednesday reflected a significant uptick from H.C. Wainwright's own conservative estimate of $17.0 million for the quarter. This estimate had been based on the anticipated impact of operational interruptions at the Ellendale site. The analyst underscored the company's resilience and ability to exceed expectations despite these setbacks.

The firm's reiterated Buy rating and price target come as Applied Digital's stock price hovers near the target range. The analyst's commentary highlighted the company's recent performance as a strong indicator of its potential, suggesting confidence in the stock's near-term prospects.

Applied Digital's latest financial report indicates a robust quarter, with revenues outstripping both the Street's and the analyst's estimates. The company's ability to navigate operational challenges and still deliver strong financial results has reinforced H.C. Wainwright's positive outlook on the stock.

The report from H.C. Wainwright concludes with a reaffirmation of the $5 price target for Applied Blockchain Inc, signaling a steady conviction in the company's value and its trajectory in the market. This comes after the company's demonstrated ability to perform beyond expectations in its May year-end financial results.

In other recent news, Applied Blockchain and Applied Digital have reported noteworthy developments. Roth/MKM adjusted the price target for Applied Blockchain to $10, citing increased GPU depreciation and high-performance computing costs in the company's fourth-quarter earnings report.

While the company met revenue expectations, losses were larger due to these increased costs. Analysts anticipate normalization of the company's Bitcoin operations in the first quarter and are closely monitoring the completion of a Letter of Intent with a Hyperscaler.

Applied Digital disclosed a substantial rise in Q4 revenues, which climbed to $43.7 million from $22 million year-over-year, despite operational challenges such as power outages. However, the company's net loss widened to $64.8 million from $6.5 million in the same quarter last year.

Despite these challenges, the company has successfully developed its cloud services and data center hosting businesses, secured over $150 million in financing, and executed a Letter of Intent with a U.S. hyperscaler for 400 megawatts at the Ellendale campus.

These recent developments underscore the strategic progress of both companies. Applied Blockchain's growth hinges on finalizing a formal lease agreement and securing potential project financing. Similarly, Applied Digital is nearing the completion of a lease agreement with a hyperscaler and expects sequential revenue improvements in the coming quarter.

InvestingPro Insights

As Applied Blockchain Inc (NASDAQ:APLD) garners attention with its robust financial performance, real-time data from InvestingPro provides further context to the company's market position. With a market capitalization of $646.3 million, the company's revenue growth is particularly striking, having surged by 252.07% over the last twelve months as of Q3 2024. This aligns with the optimistic sentiment from H.C. Wainwright, underscoring the company's impressive sales momentum.

An InvestingPro Tip highlights that analysts anticipate sales growth in the current year, reinforcing the company's potential for sustained financial success. Moreover, Applied Digital's stock has seen a significant return over the last week, with a 7.82% price total return, indicating a positive short-term investor sentiment. However, with a P/E Ratio (Adjusted) at -9.93, it is clear that the market is pricing in the challenges ahead, including the company's expected drop in net income this year and the absence of profitability over the last twelve months.

For investors seeking a comprehensive analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/APLD, which delve deeper into the company's financial health and market performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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