On Thursday, H.C. Wainwright maintained a Buy rating on shares of Bitfarms Ltd. (NASDAQ:BITF) with a steady price target of $4.00, following the company's disclosure of its third-quarter 2024 performance.
Bitfarms shared its results on Wednesday, which were strong, but the company also announced a postponement in reaching its year-end 2024 hash rate goal of 21 EH/s to the first half of 2025. Moreover, the company withdrew its 35 EH/s hash rate projection for 2025. This news led to a 15% drop in Bitfarms' stock, contrasting with a slight decline in the Nasdaq.
Bitfarms, currently operating at a hash rate of 11.9 EH/s, admitted during the earnings call that it would not meet its previously stated guidance for 2024. The management cited three primary reasons for the shortfall: construction delays at various sites, postponed miner shipments, and ongoing maintenance for underperforming Bitmain T21 miners.
Despite these setbacks, H.C. Wainwright analysts believe that Bitfarms should have the necessary infrastructure capacity by 2025 to exceed the initial 35 EH/s target. However, the company's management has decided not to issue guidance for the next year, opting to keep their options open as they explore opportunities in High-Performance Computing (HPC) and Artificial Intelligence (AI).
The firm views the recent earnings call as a moment of clarity for Bitfarms, resetting expectations and adopting a more cautious strategy for future guidance. Yet, analysts suggest that investors should not ignore the significant logistical and operational achievements Bitfarms has realized in 2024, particularly with the upgrade of its mining fleet.
Year-to-date, the company has replaced over 50,000 older generation miners with 46,000 new ones across ten data centers, increasing its hash rate capacity by 83% to 11.9 EH/s and improving fleet efficiency by 40% to 21 J/TH, accomplishing this three months ahead of schedule.
Moreover, Bitfarms has strategically expanded its footprint in the United States by acquiring three new sites in Pennsylvania. This move is part of the company's strategy to diversify its portfolio geographically. Despite the revised guidance, H.C. Wainwright's stance on Bitfarms remains unchanged, with a reiterated Buy rating and a $4 price target.
In other recent news, Bitfarms Ltd., a global Bitcoin mining company, reported key strategic growth and operational results in its third quarter 2024 earnings call. Despite a 14% increase in Bitcoin earned and an 8% rise in revenue, the company faced a net loss of $37 million due to one-time costs and increased expenses.
Bitfarms also announced a significant merger with Stronghold Digital Mining and operational upgrades, including a major fleet upgrade that increased hashrate by 83%.
The company is shifting its strategic focus, diversifying into high-performance computing (HPC) and artificial intelligence (AI), and expanding its operations in the United States, particularly in the PJM energy market.
It is targeting 21 exahash by the first half of 2025 and has secured over 500 megawatts for 2025, aiming to meet the growing demand for data center capacity. However, Bitfarms has experienced delays in achieving its hashrate targets due to construction and shipping challenges.
These are recent developments that have influenced Bitfarms' strategic direction and operational performance. The company holds $146 million in liquidity and plans to monetize assets strategically. It's important to note that these facts are based on the company's recent earnings call and are subject to change as the company continues to navigate the dynamic Bitcoin mining market.
InvestingPro Insights
To complement the analysis provided by H.C. Wainwright, InvestingPro data offers additional insights into Bitfarms' financial position and market performance. Despite the recent setbacks in meeting hash rate targets, Bitfarms has shown strong revenue growth, with a 43.88% increase in the last twelve months as of Q3 2024, reaching $182.96 million. This aligns with the InvestingPro Tip that analysts anticipate sales growth in the current year.
However, the company's profitability remains a concern. InvestingPro data reveals a negative gross profit margin of -17.48% and an operating income margin of -42.52% for the same period. This supports the InvestingPro Tip that Bitfarms suffers from weak gross profit margins and is not expected to be profitable this year.
On a positive note, Bitfarms' stock has shown remarkable performance, with a 96.96% price return over the past year. This strong return is highlighted by another InvestingPro Tip, which notes the company's high return over the last year. Additionally, Bitfarms holds more cash than debt on its balance sheet, potentially providing financial flexibility as it navigates the challenges of expanding its hash rate capacity.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Bitfarms, providing a deeper understanding of the company's financial health and market position.
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