On Tuesday, Cantor Fitzgerald initiated coverage on shares of Iris Energy Ltd. (NASDAQ: NASDAQ:IREN) with an Overweight rating and established a price target of $23.00. The new assessment points to a significant upcoming growth phase for the company, as it is expected to see its hash rate capacity surge from 9.4 EH/s recorded in April to over 40 EH/s by mid-2025.
Iris Energy has successfully secured a considerable amount of power capacity at 2,160 megawatts. This strategic move positions the company advantageously for potential additional hash rate growth, as well as for advancements in its Artificial Intelligence and High-Performance Computing (AI/HPC) initiatives. Although Iris Energy is in the nascent stages of its AI/HPC development, the firm anticipates this sector could evolve into a substantial contributor to the company's revenue and serve as a diversifier for its business model.
The company's ambitious expansion in hash rate capacity is indicative of its commitment to growth and innovation within the cryptocurrency mining industry. Iris Energy's significant investment in power capacity not only facilitates its current operations but also lays the groundwork for future endeavors in related technology sectors.
The setting of a $23.00 price target reflects confidence in Iris Energy's strategic direction and its potential for increased profitability. With the industry's rapid evolution, Iris Energy's diversified approach, encompassing both cryptocurrency mining and AI/HPC, may provide the company with a competitive edge in the market.
The Overweight rating suggests that Cantor Fitzgerald views Iris Energy's stock as likely to outperform the average total return of the stocks in the analyst's industry coverage universe over the next 12 to 18 months. Investors and market watchers will be keeping an eye on Iris Energy's progress as it works towards achieving the milestones laid out in this growth trajectory.
In other recent news, IREN, a major player in the Bitcoin mining industry, has reported significant expansion in its data center and Bitcoin mining operations. The company's Bitcoin mining operating capacity is expected to reach a remarkable 30 exahash by the end of the year, surpassing the initial projection of 20 exahash. This expansion is supported by a transaction with Bitmain, a leading producer of mining hardware, and the construction of new data centers.
In addition, IREN's AI cloud services division, which operates 816 NVIDIA (NASDAQ:NVDA) H100 GPUs, is witnessing growth, with expected hardware profits of around $14-$17 million annually. The company is actively engaged in customer discussions for both cloud and colocation solutions and is exploring financing opportunities to support further growth.
On the financial front, IREN reported a positive cash flow from operations at $48 million and a net profit before tax of $12 million for the quarter. Analysts from Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) suggest a potential increase to 40 exahash in the first half of 2025, further solidifying IREN's position in the industry.
These are the recent developments, reflecting IREN's commitment to driving shareholder value and positioning itself as a leading publicly listed miner. It is also noteworthy that IREN has partnered with the District of Mackenzie to provide high-speed fiber-optic connectivity, enhancing local connectivity and providing redundancy for its data center.
InvestingPro Insights
In light of the recent coverage by Cantor Fitzgerald, current data from InvestingPro underscores the dynamic financial landscape of Iris Energy Ltd. (NASDAQ: IREN). With a market capitalization of $1.51 billion, the company demonstrates a robust financial position. Impressively, the gross profit margin for the last twelve months as of Q3 2024 stands at 88.16%, indicative of strong operational efficiency. Moreover, the revenue growth for Q3 2024 was a staggering 379.82%, highlighting the company's rapid expansion.
Two InvestingPro Tips that may be particularly relevant for investors considering Iris Energy are the company's impressive sales growth anticipated in the current year and the fact that analysts predict the company will be profitable this year. These insights could suggest a positive outlook for the company's financial health and operational success. For those looking to delve deeper into Iris Energy's potential, InvestingPro offers additional tips that could be invaluable. By using the promo code PRONEWS24, investors can access these insights with an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
It's worth noting that while the stock has seen significant returns over the past week, month, six months, and year, with a 1-week price total return of 15.97% and a 1-year price total return of 183.24%, it is trading at a high revenue valuation multiple. This could suggest that the market has high expectations for the company's future growth. As Iris Energy continues to expand its hash rate capacity and diversify into AI/HPC, these financial metrics and InvestingPro Tips will be key indicators to watch.
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