H.C. Wainwright Downgrades Argo Blockchain ADR (ARBK) to Neutral

H.C. Wainwright analyst Kevin Dede downgraded Argo Blockchain ADR (NASDAQ: ARBK) from Buy to Neutral.

The analyst said: "Carefully managed operations may become insufficient to offset increasingly difficult mining economics. Yesterday, Argo Blockchain released its full 2023 figures, reporting revenue of $50.6M, down 14% from the $58.6M reported for 2022, primarily on the increase in network hash rate last year, meaning added competition for bitcoin block awards. Included in yesterday's earnings release was an update on Argo's financial position at March quarter end, infinitely more important from our perspective given the improvement in mining economics through that quarter on the surge in bitcoin price and the halving event late last week. Particular to Argo is the company's debt overhang, certainly not a new issue for any follower and detailed on the following page. As of March, debt was still standing at $54.0M, but down from $66.2M at year-end, vs. $12.4M in cash end-March while holding 26 bitcoin and equivalents for $1.7M at the time this went to press. Further, cash was bolstered and Galaxy debt reduced by the sale of Argo's Mirabel 5MW and 30K sq. ft. facility for $6.1M, or roughly $1.2M per MW, implying its remaining fully-owned Baie Comeau, Quebe 15MW and 40K sqft. facility is worth roughly $18.3M. Recall, the company hosts the majority, 2.4Eh/s of its total 2.7Eh/s, hash rate at Helios, now owned and operated by Galaxy Digital (GLXY.CA; not rated). Also, March quarter revenue tallied approximately $17.0M per yesterday's press release, versus $16.2M generated in the December quarter, showcasing the effect bitcoin price has on mining revenue, subjugating, in this case, the influence in network hash expansion over the six months of the combined periods. As the last bullish holdout on the Street, we are finally tossing in the towel and downgrading our investment rating to Neutral from Buy."

For an analyst ratings summary and ratings history on Argo Blockchain ADR click here. For more ratings news on Argo Blockchain ADR click here.

Shares of Argo Blockchain ADR closed at $1.52 yesterday.

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