The price of Bitcoin currently sits roughly 4% beneath the all-time high achieved in mid-March, barely a pullback in crypto terms. Since last year’s Covid-driven slump, the uptrend has shown itself to be particularly resilient. The Bitcoin price surge has been reflected in the price of Bitcoin stocks, which have been on a tear, too.
Tear might be an understatement when considering Bitcoin miner Riot Blockchain’s (RIOT) performance. The stock is up by a barely believable 6,570% over the past 12 months.
The Bitcoin miner’s latest quarterly results give some credence to the surging share price and H.C. Wainwright’s Kevin Dede says they are “indicative of mining power to come.”
In 4Q20, Riot’s mining revenue increased by 113% quarter-over-quarter to reach to $5.2 million, handily beating Dede’s $3.6 million estimate. The company turned a profit in the quarter, too, with $3.9 million in net income on a GAAP basis vs. the $3.4 million net loss reported a year ago.
“With consistently high—relative to 2020 pricing history—bitcoin prices, and what we and many others perceive as a bitcoin supply-demand imbalance, Riot’s outlook appears exceedingly bright at least through the balance of the year primarily on the semiconductor and mining machine shortages Riot mostly mitigated via advanced purchase agreements, in our opinion,” the 5-star analyst said.
Exiting 2020, Riot’s hashing capacity grew by 460% year-over-year. The company has ensured it can keep increasing its hash rate. In mid-March, the company announced that it purchased an extra 1,500 Antminers, bringing Riot’s overall mining network to 39,146 machines.
By the end of 2021, when fully deployed, the network will be able to generate approximately 4.0 EH/s, which amounts to about 2.4% of the Bitcoin network at today’s 164 EH/s level.
Accordingly, while “cowering away from taking a shot at 2022E figures,” Dede raised the FY21 sales forecast from the previous $158.6 million to $205.3 million.
There’s also a significant increase to Dede’s 2021 EPS estimate, which due to stronger mining revenue and an improved gross margin profile, now stands at $1.95, up from the previous $0.70.
Not to be left out, the price target gets a new improved look, as well. The figure is more than doubled from $28 to $64, leaving room for a 23% uptick from current levels. Needless to say, Dede’s rating stays a Buy. (To watch Dede’s track record, click here)
Despite Riot’s incredible surge, the rest of Wall Street has so far refrained from covering this stock, and Dede’s is currently the lone review on record. (See Riot stock analysis on TipRanks)
To find good ideas for blockchain stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.