J.P. Morgan analyst Reginald Smith has maintained their neutral stance on IREN stock, giving a Hold rating today.
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Reginald Smith has given his Hold rating due to a combination of factors surrounding Iris Energy’s current financial and operational status. The company has reported record revenue and cash operating profit, primarily driven by its bitcoin mining business, which is a positive indicator. However, the significant investment of approximately $500 million in expanding its Cloud Services business, particularly in acquiring NVIDIA GPUs, suggests a considerable capital expenditure that needs careful monitoring.
While the management’s foresight in scaling the GPU business and the potential increase in Cloud Services revenue to $200M-$250M by the end of 2025 is commendable, the substantial rise in cash SG&A expenses and power costs raises concerns. The increased operational costs, including a 20% sequential rise in cash cost per coin mined, indicate potential challenges in maintaining profitability margins. Therefore, despite the promising growth prospects, the financial commitments and cost pressures justify a cautious Hold rating at this time.
According to TipRanks, Smith is a 4-star analyst with an average return of 13.3% and a 52.83% success rate. Smith covers the Financial sector, focusing on stocks such as Riot Platforms, SoFi, and Iris Energy.