Needham analyst John Todaro initiated coverage on TeraWulf Inc (NASDAQ:WULF) with a Buy rating and a price target of $6.
Todaro noted that TeraWulf is one of the best miners for converting data center capacity to High-Performance Computing (HPC).
HPC represents a high-margin, large, and growing revenue opportunity with long-term contracts that provide revenue and margin transparency longer term.
Todaro noted that TeraWulf will be early to market in bringing a 100MW+ site online for HPC. Additionally, the analyst expects lower capex versus peers as TeraWulf's sites are more suitable for near-term HPC designs.
He expects HPC to be a fast-growing, attractive, and stable margin business for miners with available power capacity.
Todaro forecasts TeraWulf will generate ~$610 million in revenue in 2026, with $350 million coming from HPC.
The analyst project the company will operate at an attractive 56% adjusted EBITDA margin.
The price target reflects 12.5x EV/EBITDA Todaro's discounted 2026 estimate, which is at a premium to pure-play bitcoin miners Riot Platforms, Inc (NASDAQ:RIOT), Iris Energy Limited (NASDAQ:IREN), which the analyst noted is warranted given its near term HPC plans, but at a modest discount to Core Scientific, Inc (NASDAQ:CORZ) which he said is currently more de-risked given CORZ has a customer in place.
Price Action: WULF stock is up 2.36% at $3.91 at the last check on Wednesday.
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