Bank of America Securities analyst Bradley Sills has maintained their neutral stance on CRWV stock, giving a Hold rating yesterday.
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Bradley Sills’s rating is based on the strategic implications of CoreWeave’s proposed acquisition of Core Scientific. The acquisition is primarily aimed at expanding CoreWeave’s access to power capacity, which is crucial for its operations in high-density workloads such as bitcoin mining and AI. The deal, valued at $9 billion, involves a premium price that reflects the need for increased power capacity, as evidenced by the high EV/TTM revenue multiple compared to historical averages.
While the acquisition offers potential benefits such as diversifying power access across new geographies and achieving significant operating expense synergies, there are notable risks involved. The execution of these synergies is uncertain, and the market already anticipates an aggressive margin improvement for Core Scientific. Additionally, the acquisition’s impact on CoreWeave’s financial metrics, such as the forward EV/EBIT ratio, suggests a cautious outlook. These factors contribute to Sills’s decision to maintain a Hold rating on CoreWeave’s stock.
Sills covers the Technology sector, focusing on stocks such as Salesforce, Microsoft, and Workday. According to TipRanks, Sills has an average return of 4.0% and a 50.00% success rate on recommended stocks.
In another report released yesterday, Stifel Nicolaus also downgraded the stock to a Hold with a $115.00 price target.