Benchmark sees nearly 100% upside on stock after AI deal
Hut 8, a bitcoin miner, is making waves in the cryptocurrency world as it transitions into an institutional-grade digital infrastructure platform. The recent announcement of a $7 billion, 15-year AI data center lease with Fluidstack for its River Bend data center in Louisiana has solidified this shift, according to Wall Street broker Benchmark.
Analyst Mark Palmer praised the deal, highlighting its superior deal economics, long-term investment-grade cash flows, and expansion potential across multiple counterparties. He reiterated his buy rating on the stock and raised his price target to $85, indicating a 93% upside from the current price of $44.12.
The news of the River Bend lease sent shares soaring by as much as 20%, reflecting investor confidence in the company’s strategic direction. Palmer’s valuation of the deal includes the lease value, potential expansion capacity, Hut 8’s stake in American Bitcoin Corp., and the bitcoin held on its balance sheet.
One key aspect that sets this deal apart is the timing. Management waited for the right opportunity to monetize its power assets, ensuring that it met internal return hurdles and strategic criteria. The 15-year payment backstop from Google further de-risks the deal, providing Hut 8 with economic ownership without additional equity sweeteners.
Benchmark values the initial 245 MW River Bend tranche at approximately $7.6 billion, taking into account the contracted cash flows and the investment-grade backstop. The potential for three five-year renewal options could increase the total contract value to $17.7 billion.
Other brokers, such as Cantor Fitzgerald and Canaccord, have also raised their price targets for Hut 8 in light of this deal. Cantor Fitzgerald now has a price target of $72, while Canaccord raised theirs to $62.
Overall, the market is bullish on Hut 8’s future prospects as it continues to expand and solidify its position as a leading player in the digital infrastructure space. Investors are eagerly watching to see how the company capitalizes on this latest deal and what other strategic moves it has in store.
