- Needham analyst John Todaro reiterated a Buy on Applied Blockchain, Inc APLD with a $5.50 price target.
- APLD posted its Q1'FY23 results after the close yesterday.
- APLD reported on the high-end of guidance for both topline and adjusted EBITDA for the quarter.
- APLD's Texas site could experience delays around regulatory approval, pushing energizing later than initially expected.
- Despite some near-term, supply-side concerns, primarily on the Texas site, demand is strong, with APLD's upcoming second North Dakota site fully contracted for 180MW.
- Additionally, Todaro views HPC as an attractive opportunity set on which APLD has made progress.
- The analyst said APLD is an attractive way to gain exposure to the growth in bitcoin mining without taking the underlying price risk of bitcoin, given the company's co-hosting strategy, where revenues and expenses are generated and paid in fiat currencies.
- Additionally, Applied's relationship with Bitmain will allow it to capitalize on migrating Chinese mining capacity into North America following the country's ban on bitcoin mining operations.
- Further, the analyst expects Applied to increase prices over time with its site-level strategy to host one anchor tenant at a lower hosting rate and fill the remaining facility with higher margin, smaller tenants.
- Lastly, Todaro found APLD's valuation attractive, as he expects its shares to trade at a premium relative to prop miners, given its lower revenue volatility and lack of exposure to bitcoin's day-to-day fluctuations.
- Price Action: APLD shares traded higher by 2.98% at $1.73 on the last check Wednesday.
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