Core Scientific Upgraded to Buy From Neutral to Reflect HPC Expansion: B Riley

• B Riley raised Core Scientific to buy from neutral, and lifted its price target to $13 from $0.50.

• Core is a future leader in high-performance computing hosting, the report said.

• The bitcoin miner has started on the path to achieving economies of scope with its CoreWeave deal, the broker said.

Core Scientific (CORZ) is a future leader in hosting high-performance computing (HPC) due to the lucrative deals it has inked with CoreWeave and management’s solid experience in operating enterprise data centers, broker B Riley said in a research report on Tuesday.

The broker upgraded the Dover, Delaware-based company to buy from neutral and raised its price target on the shares to $13 from $0.50. The shares were trading 1.5% lower at $11.53 at publication time.

B Riley said it was updating its estimates for Core Scientific to reflect the CoreWeave deal and potential future HPC agreements. It said it valued the already announced agreements, excluding the Austin contract, at $2.3 billion in total for the committed 270 megawatts (MW). This does not include possible extension options for both contracts.

“With 1.23 million bitcoin (BTC) left to be mined (~6% of total issuance), the size of the industry, excluding transaction fees, is around $80 billion at today’s BTC prices,” analysts Lucas Pipes and Nick Giles wrote, adding that “we have maintained a long-term thesis that economies of scope will become increasingly important for digital miners.”

Core has started on the path to achieving economies of scope with this AI deal, and has exceeded expectations with the structure it agreed because CoreWeave will fund all capital costs arising from HPC upgrades, the report said.