Canaccord Genuity Reaffirms 'Buy' Rating For Galaxy Digital Holdings With CA$17.00 Target

Canaccord Genuity has reaffirmed its “Buy” rating on Galaxy Digital Holdings BRPHF, maintaining its price target at CA$17.00.

This decision follows Galaxy Digital’s performance in the first quarter of 2024, showcasing significant growth across its various business segments.

Strong Q1 Performance

Galaxy Digital reported a robust first quarter, with total net income increasing by 40% quarter-over-quarter to $422 million.

This performance was driven by net realized gains on digital assets and substantial growth in fee revenue, lending, and staking income.

The company’s equity capital and book value per share rose by 22% and 25%, respectively, to $2.2 billion and CA$9.11 by the end of the quarter.

Market And Trading Insights

The trading segment of Galaxy Digital demonstrated solid growth, with the number of trading counterparties increasing from 1,052 in Q4 2023 to 1,161 in Q1 2024.

Trading revenue surged 79% sequentially to $66 million. The segment also saw an increase in the average loan book size to $664 million.

Galaxy’s futures trading volume was notable, and the company is in the process of receiving its swap dealer designation, which is expected to enhance profitability and expand trading opportunities beyond the current ~$8 billion notional value.

Asset Management Growth

Galaxy Digital’s asset management division also experienced significant growth, with assets under management (AUM) rising by 50% quarter-over-quarter to $7.8 billion.

The company achieved record management and performance fees of $17.8 million. This growth was primarily driven by managing opportunistic mandates and market appreciation.

Additionally, Galaxy launched two new XTrackers ETCs in partnership with DWS Group, providing European investors access to Bitcoin BTC/USD and Ether ETH/USD.

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Infrastructure Expansion

In the infrastructure segment, Galaxy Digital’s proprietary mining hashrate increased by over 60% sequentially to 3.1 EH/s.

The company’s Helios mining facility in Texas, acquired in December 2022, has energized approximately 180 MW of its 800 MW contracted power.

Plans are underway to energize an additional 300 MW, with Galaxy exploring opportunities to leverage this capacity for high-performance computing and AI hosting.

Analyst Perspective

Joseph Vafi, CFA, lead analyst at Canaccord Genuity, expressed optimism about Galaxy Digital’s strategic positioning and growth potential.

“We are encouraged to see solid progress in growth and maturation in each of the company’s three operating units coming into view over the next few quarters. And while the regulatory backdrop remains something of a gating factor, the company’s opportunity set ahead and competitive positioning remain compelling, in our view,” Vafi stated.

Investment Outlook

Canaccord Genuity’s reaffirmation of its “Buy” rating and CA$17.00 price target underscores confidence in Galaxy Digital’s ability to sustain growth and capitalize on emerging opportunities in the digital assets sector.

The company’s diversified business model and strategic initiatives position it well for continued success, according to Canaccord Genuity.

Future Discussions At Benzinga’s Event

The broader implications of Galaxy Digital’s performance and the evolving regulatory environment for digital assets will be key topics at Benzinga’s Future of Digital Assets event on Nov. 19.

Industry leaders, investors, and policymakers will gather to discuss the future of digital assets and the impact of regulatory developments on the sector.

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