Applied Digital pares gains in after-hours following conservative Q4 guide

Shares of Applied Digital (APLD) were sharply higher during the session after an analyst from Craig-Hallum increased the firm’s price target on the shares. The stock was trading lower in the after hours, however, following the company provided a conservative revenue outlook for the fourth quarter.

CRAIG-HALLUM UPS PRICE TARGET: Before the market open, Craig-Hallum analyst George Sutton raised the firm’s price target on Applied Digital to $15 from $13 and maintained a Buy rating on the shares. After signing deals of $180M over two years and $460M over three years, Sutton said it is “clear” that the company is part of the top-tier ecosystem of players who can provide the GPUs, the power, and the available space that is at a huge premium in today’s market. Decisions made months ago to secure third party space, built out its own HPC farm, and negotiate with key power partners give the analyst a clear line of sight into “massive growth” ahead.

PRELIMINARY EXPECTATIONS: In a regulatory filing released after the close, Applied Digital announced “current and preliminary expectations” of financial results for its quarter ended May 31, 2023. For Q4, the company estimates revenue overall will be approximately $22M, net loss overall will be approximately ($6.8M), and adjusted EBITDA will be in the range of $2.7M-$3.2M. The consensus estimates are $30.06M for revenue and (3c) in earnings per share.

PRICE ACTION: Applied Digital shares closed 13.6% higher at $9.19. In after-hours trading, though, shares are down 2.5% at just under $9.