On Thursday, Cantor Fitzgerald initiated coverage on Marathon Digital Holdings (NASDAQ:MARA), a major player in the Bitcoin mining industry, with an Overweight rating and a price target of $21.00. The firm highlighted Marathon's status as the largest publicly traded Bitcoin miner, with a significant installed hash rate of 36.9 EH/s as of the end of September.
Marathon Digital Holdings is recognized for its extensive portfolio, which includes over 250,000 Bitcoin mining machines across owned and leased infrastructure totaling 1.1 GW. The company has shifted its strategy from relying on third-party hosting for its machines to focusing on owning and operating its own Bitcoin mining infrastructure. This move is expected to reduce Marathon's overall costs to mine Bitcoin significantly.
The firm also noted that Marathon's business extends beyond just Bitcoin mining. The company is involved in mining Kaspa and is in the process of developing its own cooling technology for data centers. Additionally, it has an energy harvesting segment that seeks to utilize stranded power. Marathon has also made technological advancements within the Bitcoin ecosystem, including the creation of Slipstream for Bitcoin transactions and Andura, a Layer 2 network built on Bitcoin.
Cantor Fitzgerald's coverage suggests that Marathon could benefit from future Bitcoin price increases and that the market may currently undervalue the profitability improvements the company could achieve as it expands its business vertically. The firm believes that this makes Marathon's shares attractive at their current levels.
In other recent news, Marathon Digital Holdings reported a net loss of $200 million in Q2 2024, despite a 78% increase in revenue to $145 million. The company also announced plans to offer $250 million in convertible senior notes due 2031, aiming to use the proceeds for purchasing additional bitcoin and for general corporate purposes. Analysts from Macquarie initiated positive coverage on Marathon Digital, expressing confidence in the company's growth potential.
Marathon Digital also reported an uptick in its bitcoin mining operations, with a 5% growth in its energized hash rate and a 6% month-over-month increase in the number of blocks won. The company now holds 26,842 BTC, having chosen not to sell any bitcoin during the reported month.
In other recent developments, Marathon Digital expanded its board of directors with the appointment of Janet George and Barbara Humpton, and the designation of Doug Mellinger as lead independent director. These appointments are expected to strengthen the board's oversight capabilities and contribute to Marathon Digital's leadership in the digital infrastructure technology sector.
InvestingPro Insights
Marathon Digital Holdings' financial metrics and market performance align with Cantor Fitzgerald's optimistic outlook. According to InvestingPro data, Marathon's revenue growth is impressive, with a 224.69% increase in the last twelve months as of Q2 2024. This robust growth supports the analyst's view of Marathon's potential to benefit from future Bitcoin price increases.
The company's profitability is also noteworthy, with an EBITDA of $381.47 million and a gross profit margin of 43.56% in the same period. These figures underscore Marathon's ability to generate substantial earnings from its Bitcoin mining operations and diversified business segments.
InvestingPro Tips highlight that Marathon is trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.11. This suggests that the stock may be undervalued compared to its growth prospects, aligning with Cantor Fitzgerald's assessment that the market may be undervaluing Marathon's potential profitability improvements.
Additionally, Marathon's strong return over the last year, with a 1-year price total return of 82.51%, reflects investor confidence in the company's strategy and market position. This performance supports the analyst's Overweight rating and $21 price target.
For investors seeking a deeper understanding of Marathon Digital Holdings, InvestingPro offers 13 additional tips that could provide valuable insights into the company's financial health and market potential.
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