On Thursday, Core Scientific Inc. shares (NASDAQ: CORZ) saw its price target increased to $17.00 from $12.50 by Compass Point, while the firm maintained its Buy rating on the stock. The revision follows the announcement of Core Scientific’s new 70MW High-Performance Computing (HPC) contract with Coreweave, which is anticipated to add an additional $1.225 billion in cumulative revenue over the span of the 12-year agreement.
The contract, which is said to carry similar economics to the first 200MW deal, with revenues of $1.45M/MW, is seen as a positive move, especially since Coreweave opted to exercise options about 20 days into the 60-90 day deadline. This decision suggests a high likelihood of Coreweave signing additional agreements for the remaining options of approximately 230MW.
Compass Point's outlook is bolstered by further details revealed during Core Scientific’s recent investor days, which highlighted the delivery schedules of three application-specific datacenters. These include two 80MW sites and a 40MW site, with an expected gross margin of 80%, surpassing previous estimates.
The firm now expects the full 200MW deal to be operational in the first half of 2025, with the entire 270MW contracted with Coreweave expected to come online by the fourth quarter of 2025. Additionally, an extra 80MW from Coreweave is projected to be operational during the calendar year 2026.
The analyst believes that Core Scientific is well-positioned to secure further HPC contracts, given its identified 500MW power capacity for HPC, datacenter expertise, and the capability to deliver application-specific datacenters for Training/Inference GPU workloads ahead of the 2028 timeline.
The updated valuation reflects increased confidence in the timeline for HPC revenue and EBITDA growth, as well as the potential for additional HPC deals. The new price target is derived from a sum-of-the-parts analysis of BTC Mining/Hosting and HPC, applying a ~15x multiple to the firm’s calendar year 2026 HPC estimates (discounted by 20% to calendar year 2025), minus $1.5M/MW in capital expenditures.
In other recent news, Core Scientific Inc. has been the subject of notable financial developments. H.C. Wainwright raised its price target for the company's shares to $11.00, reflecting potential growth from Core Scientific's recent 200MW hosting expansion for its CoreWeave contract, projected to generate cumulative revenue of $3.5 billion.
Moreover, Compass Point increased its price target for Core Scientific's shares to $12.50, following the same hosting agreement with CoreWeave. BTIG upgraded Core Scientific from a Neutral to a Buy rating, citing the company's consistent operational performance.
The company also announced a significant expansion of its hosting deal with CoreWeave. The new agreement, which involves modifying 100 MW of infrastructure for CoreWeave's operations, is expected to generate an additional $1.225 billion in cumulative revenue. This is in addition to the over $3.5 billion in revenue projected from prior agreements with CoreWeave.
Core Scientific's CEO, Adam Sullivan, has secured a new employment agreement, which includes a base salary of $625,000 and an annual incentive target of 125% of the base salary, contingent upon performance criteria. The company also announced a 72-megawatt capacity expansion at its Denton, Texas data center, expected to be completed by 2024.
Furthermore, Core Scientific reported record bitcoin earnings in March 2024, mining 906 bitcoins and facilitating the earning of an estimated 309 bitcoins for its customers. These are the recent developments in the operations of Core Scientific.
InvestingPro Insights
Following the upbeat assessment by Compass Point, current metrics and InvestingPro Tips for Core Scientific Inc. (NASDAQ: CORZ) offer additional insights. With a market capitalization of $1.77 billion and a significant price-to-earnings (P/E) ratio of 72.66, investors are valuing the company's future growth prospects.
This is further highlighted by the company's strong performance in the market, with a one-month price total return of 106.43% and a three-month return of 195.25%. These figures underscore the positive momentum Core Scientific has been experiencing recently.
InvestingPro Tips reveal that while the stock is currently in overbought territory according to the Relative Strength Index (RSI), analysts predict the company will turn profitable this year, which could sustain investor interest. Moreover, the company has demonstrated a high shareholder yield, indicating a commitment to maximizing shareholder value.
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