On Monday, Core Scientific Inc. (NASDAQ: CORZ) received a new Buy rating from Canaccord Genuity, accompanied by a price target of $16.00. The initiation of coverage by the firm is based on Core Scientific's recent deal with Coreweave for high-performance computing (HPC) hosting, which is seen as a strategic move within the Bitcoin-mining sector.
Core Scientific, which began its Bitcoin mining operations earlier than many of its competitors, has been noted for its unique site-acquisition strategy that leverages older industrial infrastructures, such as idled thread and steel factories.
This approach has provided the company with access to idle power and established infrastructure in metropolitan areas with reliable electrical grids and fiber availability. Such strategic advantages have been highlighted as key factors in Coreweave's decision to partner with Core Scientific for its initial venture into utilizing Bitcoin-mining infrastructure for HPC and AI data center hosting.
The analyst from Canaccord Genuity pointed out that Core Scientific's brownfield site acquisition strategy sets it apart from other players in the field. This strategy has not only enabled the company to secure power resources but also to offer potential lower risk and lead times to its clients. The established locations of Core Scientific's facilities, with their stable power supply and favorable climate conditions compared to new greenfield sites, are seen as beneficial for AI hosting.
Additionally, the Core Scientific data center team was recognized as a crucial element in Coreweave's decision-making process, suggesting that the company's operational expertise played a significant role in securing the deal. The analyst's commentary underscores the importance of Core Scientific's early start in the industry and its strategic infrastructure choices in positioning the company for growth in the HPC hosting space.
The new Buy rating and price target reflect Canaccord Genuity's positive outlook on Core Scientific's business strategy and its recent partnership with Coreweave.
In other recent news, Core Scientific has announced several significant developments. Chief Financial Officer Denise Sterling is set to step down by May 2025, with the company initiating a search for her successor. In terms of earnings and revenue, Core Scientific reported mining 358 bitcoins in August, generating approximately $22.5 million in sales proceeds. The company also paid off $267 million in high-interest debt, a move facilitated by the proceeds from its recent convertible senior notes offering.
Core Scientific plans to offer $350 million in convertible senior notes due in 2029, aiming to repay outstanding loans and other corporate purposes. The company has also secured $6.7 billion in high-performance computing contracts, including a 12-year agreement with CoreWeave expected to contribute $2.0 billion to its cumulative revenue.
Analysts from firms Cantor Fitzgerald and H.C. Wainwright have given Core Scientific an Overweight and Buy rating respectively, indicating confidence in the company's recent developments.
InvestingPro Insights
In light of Core Scientific Inc.'s (NASDAQ: CORZ) recent Buy rating and strategic partnership developments, insights from InvestingPro provide a deeper understanding of the company's financial health and market performance. Core Scientific's market capitalization stands at $3.09 billion, reflecting its significant presence in the industry. Despite not being profitable over the last twelve months, analysts predict that the company will turn a profit this year, indicating a potential shift in its financial trajectory.
InvestingPro data shows that Core Scientific has experienced a strong return over the last three months, with a 33.56% price total return, and an even more impressive six-month price total return of 253.39%. This performance suggests a robust investor confidence which aligns with the positive sentiment from Canaccord Genuity's analysis. Additionally, Core Scientific's revenue growth over the last quarter was 11.18%, further supporting the company's potential for expansion in the HPC hosting space.
It's important to note that Core Scientific is trading near its 52-week high, at 94.85% of the peak, which may interest investors looking for companies with strong market momentum. For those considering a deeper dive into Core Scientific's financials and future outlook, InvestingPro offers additional insights and metrics, with a total of 11 InvestingPro Tips available, including assessments on shareholder yield and valuation multiples. Visit https://www.investing.com/pro/CORZ for a comprehensive analysis.
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