Shares of crypto miner Marathon Digital (NASDAQ:MARA) have rallied by a massive 367% year-to-date, driven by the rebound in Bitcoin (BTC-USD) this year. The company is scheduled to announce its second-quarter results on August 8, 2023. Ahead of the results, Wall Street’s average price target does not indicate much upside from current levels, as the optimism surrounding the crypto miner already seems to be priced into the stock.
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Recent BTC Production and Q2 Expectations
Aside from the rise in Bitcoin on a year-to-date basis, MARA and other crypto stocks have also gained from the growing interest in launching a Bitcoin spot ETF, with several firms, including Blackrock (BLK) and Invesco, filing applications. The approval of Bitcoin ETFs is expected to boost BTC’s liquidity, benefiting Bitcoin miner Marathon.
Coming to recent performance, Marathon produced 979 Bitcoin in June, reflecting a 599% year-over-year growth but down 21% from May. The company blamed the sequential decline on weather-related curtailment in Texas and a huge drop in transaction fees.
On the positive side, the company increased its operational hash rate by 16% on a month-over-month basis to 17.7 exahashes per second in June. The company seems to be on track to achieve its target hash rate of 23 exahashes per second this year.
Marathon is scheduled to announce its Q2 2023 results on August 8. Analysts expect the company’s loss per share to reduce considerably to $0.03 from a loss per share of $1.75 in the prior-year quarter.
In the first quarter of 2023, Marathon’s sales declined slightly to $51.1 million from $51.7 million in the prior-year quarter, as higher Bitcoin production was offset by a decline in Bitcoin prices. However, the company’s net loss per share reduced to $0.05 from $0.12 in the prior-year quarter due to the realized gain on the sale of digital assets and favorable variances related to the impairment of digital assets. Marathon fared better than analysts’ consensus estimate of a loss per share of $0.09.
Is Marathon Digital a Good Stock to Buy?
Last week, Compass Point analyst Chase White increased his price target for Marathon Digital to $21 from $13.50 and reiterated a Buy rating on the stock. White updated his estimates for the second quarter to reflect his updated Bitcoin price and global hash rate forecasts following Q2 production reports by Marathon and other Bitcoin miners in his coverage.
Wall Street’s Moderate Buy rating on the stock is based on two Buys and one Hold. Following the stellar jump in the stock so far in 2023, the average price target of $16.33 implies a modest 2.3% upside potential.
Conclusion
Wall Street seems cautiously optimistic about MARA stock following a solid jump on a year-to-date basis. The growing regulatory crackdown on the crypto market and volatility related to Bitcoin are among the two risks that should be considered before investing in crypto stocks.
Meanwhile, Marathon Digital continues to enhance its hash rate. Further, the company is optimistic about its new joint venture in Abu Dhabi. Hashing at the joint venture commenced recently and the company continues to expect the full 7.0 exahashes of this entity to be online before the end of this year.
