Key Takeaways
- Benchmark increased Hut 8 (HUT) price target from $85 to $165 while maintaining its Buy recommendation
- With HUT trading near $99, the updated target suggests approximately 65% potential upside
- The company secured two 15-year lease agreements representing 597 MW of IT capacity with $16.8B in base-term contracted value
- Hut 8 secured $7.5B in non-dilutive project financing for its River Bend and Beacon Point facilities
- The firm’s development portfolio has expanded to over 9 gigawatts spanning multiple project stages
Benchmark analyst Mark Palmer nearly doubled the firm’s price objective on Hut 8 (HUT) this Tuesday, lifting it from $85 to $165 while reaffirming a Buy rating. Trading around $99 currently, HUT shares would need to climb roughly 65% to reach the new target.
Palmer believes the market hasn’t fully recognized the velocity of the company’s transformation. Despite a nearly 30% pullback over the last six weeks, HUT has still delivered 116% gains year-to-date as its operational expansion accelerates.
The catalyst behind the upgraded outlook is straightforward: Hut 8‘s strategic shift toward AI-focused data center infrastructure is producing substantial, locked-in revenue streams.
The company has executed two 15-year triple-net, take-or-pay lease arrangements — one at its River Bend campus in Louisiana and another at Beacon Point in Texas. Combined, these facilities represent 597 megawatts of IT capacity.
According to Palmer’s analysis, these agreements represent $16.8 billion in contracted base-term lease revenue. Should the tenants activate their renewal clauses, total contract value could surge to $42.8 billion.
Texas Campus Anchors Valuation Increase
The Beacon Point facility in Texas served as the primary driver for Benchmark’s enhanced price target. Palmer calculates that just the initial phase carries $9.8 billion in base-term contract value, translating to approximately $655 million in average annual net operating income.
Hut 8 recently completed a $4.25 billion bond issuance through Beacon Point DC LLC to fund the Texas development. These senior secured notes carry a 6.129% coupon and don’t mature until 2042. Moody’s granted them a Baa2 rating, placing them in investment-grade territory.
This follows a preceding $3.25 billion capital raise for the River Bend facility. Combined, the company has secured $7.5 billion in project financing without diluting existing shareholders.
Palmer characterized the approach as transforming development-stage assets into predictable, long-duration cash flows while simultaneously reducing capital costs. He likened Hut 8 to a “power-first data center REIT with a built-in development engine.”
Expanding Development Portfolio
Beyond its two active facilities, Hut 8 maintains a development pipeline exceeding 9 gigawatts across various phases including exclusivity agreements, active development, construction, and management.
To put this in perspective, other Bitcoin mining operations such as Core Scientific (CORZ), Hive Digital (HIVE), and Bit Digital (BTBT) have pursued comparable transitions into AI infrastructure. However, Hut 8’s financing magnitude and contract scale position it distinctly within this cohort.
Separately, Lucid Capital Markets launched coverage on HUT with a Buy rating and an even more aggressive $226 price target — significantly exceeding Benchmark’s projection.
The company also announced the appointment of E. Stanley O’Neal, former CEO of Merrill Lynch, as the new Chairman of its Board of Directors.
Benchmark acknowledged that upcoming second-quarter financials might appear distorted due to mark-to-market adjustments on bitcoin positions and the consolidation of American Bitcoin (ABTC), but emphasized these accounting factors obscure the robust economics of the underlying AI infrastructure business.
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