Fermi Inc. (FRMI) has received a new Buy rating, initiated by Mizuho Securities analyst, Vikram Malhotra.
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Vikram Malhotra has given his Buy rating due to a combination of factors that highlight Fermi Inc.’s potential for significant growth. One of the main reasons is the company’s unique position as both a landlord and a power generation company, which allows it to deliver off-grid power at scale, a capability that sets it apart from its peers. The company’s strategic land asset in Amarillo, Texas, is well-suited for natural gas and potentially nuclear power generation, providing a strong foundation for future developments.
Additionally, Malhotra believes that Fermi Inc. can achieve pricing power in the data center market, despite the competitive landscape. The company’s proximity to key resources and its ability to offer a one-stop solution in a deregulated state like Texas are seen as significant advantages. Furthermore, the potential returns on infrastructure build-out are considered higher than typical real estate projects, with conservative cost estimates factored into the analysis. Lastly, while Fermi Inc. currently has no revenue, the valuation considers future revenue from firm leases and potential upside from additional projects, supporting the optimistic price target and Buy rating.