Arete Research Sees More Than 150% Upside In Hut 8 Stock

Arete Research Sees More Than 150% Upside In Hut 8 Stock

Independent equity research firm Arete Research has initiated coverage of Canada’s Hut 8 stock (NASDAQ: $HUT) with a buy rating and a $136 U.S. price target.

The price target is the highest on Wall  Street and is 162% higher than where HUT stock currently trades. 

London, England-based Arete Research is bullish on Hut 8 as the company executes its transition into artificial intelligence (A.I.) and high-performance computing (HPC) data centres.

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In a note to clients, Arete cited Hut 8’s River Bend lease agreement as a key factor in its positive assessment of the company and its stock.

The 15-year lease includes rent payment guarantees from Google parent company Alphabet (NASDAQ: $GOOGL). 

The agreement with Alphabet should generate an average of $454 million U.S. in annual operating income for Hut 8 with 99% margins, according to Arete Research.

Arete also notes that Hut 8’s cost of debt for its data centre operations remains low by industry standards, which is another reason to consider buying the stock.

If there’s one worry about Hut 8, it is the company’s Bitcoin (CRYPO: $BTC) exposure, said analysts at Arete. 

Hut 8 owns approximately 61% of American Bitcoin (NASDAQ: $ABTC), the crypto treasury company founded by Eric Trump and Donald Trump Jr. 

Hut 8 also maintains its commitment to Bitcoin mining. The two heavily expose the company to the current downturn in BTC’s price.

HUT stock is currently trading at $51.94 U.S. per share, having gained 272% in the last year. 

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