H.C. Wainwright Analysts Predict Growth for Bitfarms’ Stock After Settlement with Riot Platforms

H.C. Wainwright analysts forecast a positive trajectory for Bitfarms’ stock following a recent settlement with Riot Platforms, which ends a six-month-long hostile takeover attempt.

On September 23, Bitfarms and Riot Platforms agreed to terminate Riot’s bid to acquire the Canadian Bitcoin mining firm. According to H.C. Wainwright analysts, Bitfarms’ stock is expected to reach $4 per share. The analysts have maintained their “Buy” rating, viewing the company’s shares as undervalued.

Currently, Bitfarms’ stock (NASDAQ: BITF) trades at $2.06 per share. Based on 2024 revenue estimates, Bitfarms’ shares are trading at approximately a 40% discount compared to other Bitcoin mining firms.

Details of the Bitfarms Deal

This deal concludes Riot’s acquisition attempt, which began in April with a $950 million offer to acquire Bitfarms – a proposal that Bitfarms’ board rejected as undervalued.

After the rejection, Riot acquired 19.9% of Bitfarms’ outstanding shares and sought to change the board structure through a special shareholder meeting. This move has now been withdrawn as part of the settlement.

Under the agreement, Bitfarms will expand its board to six members and will nominate an independent director, with Riot agreeing to support all proposed measures. Riot will also gain the right to acquire additional Bitfarms shares, provided it holds at least 15% of the outstanding shares.

Analyst Insights

H.C. Wainwright analysts see this agreement as a significant win for Bitfarms, removing a major overhang on the company’s shares.

Bitfarms can now focus on its 2024 growth strategy, aiming to achieve its target of 21 exahashes per second by the end of next year.

This is viewed as a crucial step for Bitfarms to regain investor confidence and execute its expansion plans without distraction.

The analysts also believe that this settlement benefits Riot, as it avoids the potential for a costly proxy battle with Bitfarms.

The analysts’ $4 price target is based on a 6.5x enterprise value-to-revenue multiple for 2024, aligning with valuations applied to other Bitcoin mining peers. However, they caution that risks such as Bitcoin price volatility, construction delays, and potential shareholder dilution remain.

Following the settlement, Bitfarms shares rose 1.7%, while Riot’s shares climbed 1.3%, reflecting the market’s positive reaction to the resolution.

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