Zinger Key Points
- Hut 8 expected to benefit from HPC leases and strong pipeline.
- HUT is the most diversified miner, the analyst says.
Needham analyst John Todaro reiterated a Buy rating on the shares of Hut 8 Corp HUT and maintained a price target of $38.00.
The analyst thinks HUT stands out as the most diversified mining company and is now entering a phase focused on enhancing mining margins through efficiency improvements, implementing significant plans in HPC along with a strong project pipeline, and trading at a relatively low price.
The analyst anticipates several key catalysts for 2025, including expected updates on HPC lease(s) in the first half of the year and a recent zoning modification approval that paves the way for the construction of HUT’s Louisiana data center.
According to the analyst, HUT is poised for significant margin improvements in 2025, as the company has made progress in three critical areas of its bitcoin mining operations.
Reducing overall energy costs across its site portfolio from the 4s to the 3s, upgrading its fleet with more efficient miners, which requires capital expenditure but improves mining economics, and leveraging operational efficiencies by increasing its hash rate while keeping general and administrative expenses stable.
On November 25, 2024, HUT submitted a proposal to construct a 300MW Tier III data center located 35 miles from Baton Rouge, Louisiana. The site presents potential for future expansion up to 1GW, with plans to lease the facility to a hyperscale tenant.
In addition to its short-term plans, it’s important to highlight that HUT has a substantial power pipeline, one of the largest in comparison to other bitcoin miners within the analyst’s coverage.
The analyst is projecting 200MW of revenue-generating critical IT capacity for 2026, contingent on finalizing customer agreements by early 2025.
To meet this timeline, HUT would need to secure a hyperscaler tenant agreement promptly (by first-quarter or early second-quarter 2025), said the analyst.
At market rental rates, the lease for 200MW could generate approximately $400 million in annual revenue and $200-270 million in adjusted EBITDA, noted the analyst.
The analyst’s price target is derived from a 15.5x multiple applied to discounted EV/adj. EBITDA estimate, which is slightly higher than the peer average.
The analyst believes this premium is justified due to the upcoming HPC opportunities, a strong project pipeline, and an expectation that HUT will emerge as one of the lowest-cost bitcoin producers in 2025 and 2026.
Price Action: HUT shares are trading lower by 6.71% at $21.83 at the last check Monday.
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© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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