On Friday, Roth/MKM maintained a positive outlook on shares of Riot Platforms (NASDAQ:RIOT), a cryptocurrency mining company, reiterating a Buy rating and a price target of $20.00. The firm's analysis suggests that Riot Platforms is currently undervalued when compared to its peers in the industry.
According to the firm, Riot Platforms' enterprise value per terahash per second (EV/TH/s) stands at approximately $85 million, which is significantly lower than the peer average of $137 million. When comparing Riot to larger, pure-play Bitcoin miners like CleanSpark (NASDAQ:CLSK) and Marathon Digital (NASDAQ:MARA) Holdings, Riot's valuation appears even more conservative. These competitors have an average valuation of around $125 million per EH/s, indicating a 47% premium over Riot.
Furthermore, the enterprise value to EBITDA (EV/EBITDA) multiple for Riot is calculated at 7.9 times for the projected year 2025, adjusted for EBITDA. This is in contrast to Marathon and CleanSpark, which trade at an average multiple of approximately 12.4 times, marking a 57% premium. The firm believes that Riot's discount is not justified, especially considering the company's potential for significant scaling at its Corsicana site and its guidance to reach 31 EH/s by the end of the calendar year 2024.
Roth/MKM suggests that the current valuation of Riot Platforms does not fully reflect the company's growth prospects and recommends buying shares of the company. Riot Platforms is expected to achieve a larger scale of operations, which could potentially lead to material gains for the stock.
In other recent news, the Bitcoin mining company Bitfarms has appointed former Chief Mining Officer Ben Gagnon as its new CEO amid a strategic review and an ongoing dispute with Riot Platforms. The transition follows the expedited departure of former CEO Geoff Morphy due to a lawsuit against Bitfarms.
Meanwhile, Riot Platforms, a significant player in Bitcoin mining, has surpassed its second-quarter target for 2024 by achieving a deployed hash rate of 22.0 exahashes per second (EH/s). The company also reported producing 255 bitcoins in June.
In the lead-up to the U.S. presidential elections, investors are closely monitoring various stocks that may be influenced by the potential impacts of either candidate's policies. UBS analysts anticipate that under a possible Trump second term, the banking industry might benefit from reduced regulations.
In the cryptocurrency and blockchain sector, companies like Coinbase (NASDAQ:COIN), Riot Platforms, and Marathon Digital have experienced stock surges. Solar manufacturers such as NASDAQ:FSLR, NYSE:NEE, and NASDAQ:RUN are expected to continue receiving incentives if Biden secures reelection.
Analysts from firms such as UBS, J.P.Morgan, and Close Brothers have provided insights into the potential impacts of the election outcome on various sectors. These recent developments reflect the heightened interest of investors in the upcoming elections and the potential changes in government policies.
InvestingPro Insights
As Roth/MKM highlights the undervalued status of Riot Platforms (NASDAQ:RIOT) in comparison to its peers, real-time data from InvestingPro bolsters the firm's optimistic stance. With a market capitalization of $3.26 billion, Riot Platforms is trading at a P/E ratio of 15.79, which suggests that the stock may be reasonably priced relative to its earnings.
Furthermore, the company's P/E ratio for the last twelve months as of Q1 2024 stands at 23.61, pointing towards expectations of earnings growth. Additionally, the PEG ratio, a metric that accounts for earnings growth, is at an attractive 0.18, indicating potential for future value.
InvestingPro Tips reveal that analysts expect net income and sales growth for Riot this year, supporting Roth/MKM's recommendation. Moreover, Riot holds more cash than debt, which could provide financial flexibility in the volatile cryptocurrency mining industry.
For investors looking to delve deeper into Riot Platforms' financial health and future prospects, there are 16 additional InvestingPro Tips available at: https://www.investing.com/pro/RIOT. To access these insightful tips, consider using the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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