Morgan Stanley analyst Stephen Byrd said the firm “rarely sees a stock as mispriced as WULF and other Powered Shell providers.”
- According to Morgan Stanley, CIFR, HUT, RIOT and GLXY stocks are also mispriced amid the current chip rout.
- The firm reiterated its ‘Overweight’ rating on TeraWulf and maintained a $65 price target, implying 392% upside from current levels.
- It noted a potential credit backstop for Hawesville, Muskie lease signings, cash flow from operating assets, and growth in Europe as upcoming catalysts.
TeraWulf (WULF) shares slipped in midday trade on Thursday, on track to log their biggest weekly loss this year, but Morgan Stanley believes the stock is severely underpriced with multiple tailwinds ahead.
In a note to investors cited by TheFly, analyst Stephen Byrd said WULF’s recent stock price drop is “at odds with underlying contract value and likely value creation from upcoming contracts.”
WULF stock fell as much as 2.7% in midday trade, hitting its lowest level since December last year. The shares have fallen over 23% so far in October amid the chip rout and are on track to log their biggest weekly dip in 11 months. On Stocktwits, retail sentiment around the company trended in ‘bullish’ territory over the past day.
WULF Isn’t The Only Stock ‘Mispriced’
According to Byrd, Morgan Stanley “rarely sees a stock as mispriced as WULF and other Powered Shell providers.” The cohort includes Cipher Digital (CIFR), Hut 8 (HUT), Riot Platforms (RIOT) and Galaxy Digital (GLXY), alongside TeraWulf.
CIFR stock was down over 5% in midday trade, hitting an over one-year low. HUT stock dropped over 8%, trading at levels last seen in April. RIOT stock tumbled around 3%, while GLXY stock was down over 4%.
On Stocktwits, retail sentiment around Cipher Digital and Hut 8 remained in ‘bullish’ territory over the past day, while sentiment around Riot Platforms trended in ‘bearish’ territory. Mike Novogratz-led Galaxy Digital saw retail sentiment shift to ‘bearish’ from the ‘neutral’ zone.
Morgan Stanley Sees Nearly 400% Upside To WULF Stock
Morgan Stanley reiterated that WULF stock was a “highly compelling” Overweight, with a price target of $65, implying a potential upside of 392% from current levels.
It noted a credit backstop for Hawesville, Muskie lease signings, assets producing cash flow, and growth in Europe as upcoming catalysts for the company.
The former Bitcoin (BTC) miner pivoted towards providing AI and HPC infrastructure in 2024. It has been repurposing parts of its mining footprint at Lake Mariner in New York for those workloads. In the second quarter, HPC leasing accounted for 71% of TeraWulf’s revenue.
Earlier this month, TeraWulf announced an agreement to expand its contracted electric-service capacity at the Muskie campus to 1 gigawatt (GW). Management, at the time, stated it was advancing commercialization discussions for the campus.
WULF stock is down nearly 2% for the year, and has dropped 27% in the last 12 months.
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