Roth/MKM has maintained a positive stance on Iris Energy Ltd. (NASDAQ: NASDAQ:IREN), reiterating a Buy rating with a $14.00 price target.
The firm highlighted significant advancements at the company's 1.4GW West Texas site, noting an accelerated energization timeline now set for April 2026, moved forward by approximately six months.
The analyst pointed out that while the exact application for the site remains to be determined, Iris Energy's exploration of various revenue streams is a positive development.
Potential uses include Bitcoin mining, high-performance computing (HPC)/artificial intelligence (AI), with also an expressed interest from hyperscale computing companies.
The site's design includes redundant power lines, which are typically advantageous for HPC/AI data centers, suggesting a potential direction for the company's strategy in West Texas. The analyst indicated that forthcoming AI tests in Childress could provide further insights into the viability of HPC operations in the region.
In other recent news, Iris Energy has reported significant advancements in both Bitcoin mining and AI cloud services. The company's Bitcoin mining revenue rose by 42% to $21.4 million in September, a result of capacity expansion and a 21% reduction in electricity costs per Bitcoin. Iris Energy also achieved an operational milestone, reaching an installed capacity of 20 exahashes per second (EH/s) ahead of schedule.
In terms of AI cloud services, Iris Energy has secured seven new deals and plans to commission an additional 1,080 NVIDIA (NASDAQ:NVDA) H200 GPUs by the end of 2024. This expansion will double the company's current AI capacity, potentially contributing around 10% to the company's earnings by year-end.
Additionally, Iris Energy has expedited the energization date of its 1.4GW substation at the West Texas data center project to April 2026. The company has also expanded its land holdings by acquiring 800 acres, supporting both Bitcoin mining operations and high-performance computing (HPC) and AI services.
Roth/MKM has confirmed its Buy rating on Iris Energy, with a steady price target of $14.00. B.Riley and Macquarie have also retained their Buy and Outperform ratings respectively. These recent developments highlight Iris Energy's strategic growth and commitment to utilizing 100% renewable energy for its operations.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Iris Energy's financial position and market performance, complementing the analyst's positive outlook. The company's revenue growth is particularly noteworthy, with a 149.98% increase over the last twelve months as of Q4 2024. This impressive growth aligns with the analyst's optimistic view of the company's expanding operations and potential diversification into HPC/AI applications.
InvestingPro Tips highlight that Iris Energy "holds more cash than debt on its balance sheet" and has "liquid assets exceed[ing] short term obligations," suggesting a solid financial foundation to support its ambitious projects, including the West Texas site development. The company's "impressive gross profit margins" of 88.24% for the last twelve months ending Q4 2024 further underscore its operational efficiency.
However, investors should note that the company is "quickly burning through cash" and is "not profitable over the last twelve months," which may explain the accelerated timeline for the West Texas site to potentially generate new revenue streams. The stock's "significant return over the last week" (27.56%) and "strong return over the last month" (16.44%) indicate growing investor confidence, possibly influenced by the developments mentioned in the article.
For readers interested in a more comprehensive analysis, InvestingPro offers 17 additional tips for Iris Energy, providing a deeper understanding of the company's financial health and market position.
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