Needham analyst John Todaro has initiated coverage of TeraWulf Inc (WULF) with a Buy rating and a price target of $6. Todaro believes that TeraWulf is a prime player in the conversion of data center capacity to High-Performance Computing (HPC), a rapidly growing market with significant revenue potential.
HPC presents a high-margin, large, and expanding revenue opportunity for TeraWulf. Todaro highlights the long-term contracts associated with HPC, which provide revenue and margin transparency for the future. TeraWulf is expected to be an early mover in this space, with plans to bring a 100MW+ site online for HPC, a key factor in Todaro’s bullish outlook.
Furthermore, Todaro expects TeraWulf’s existing data centers to require lower capital expenditures (capex) compared to competitors, making them ideal for near-term HPC designs. He sees HPC as a fast-growing, attractive, and stable margin business for miners with readily available power capacity.
Todaro predicts that TeraWulf will generate approximately $610 million in revenue in 2026, with a significant $350 million coming from HPC. The analyst projects an attractive adjusted EBITDA margin of 56%.
The $6 price target reflects a 12.5x EV/EBITDA multiple, which Todaro considers a premium compared to pure-play Bitcoin miners like Riot Platforms, Inc (RIOT) and Iris Energy Limited (IREN). This premium is justified, according to Todaro, due to TeraWulf’s near-term HPC plans. However, it is still at a modest discount to Core Scientific, Inc (CORZ), which has a customer already in place.
WULF stock has responded positively to the news, closing up 2.36% at $3.91 on Wednesday.
