Terawulf Inc. (WULF) PT Raised to $6.50 at Compass Point, 'Strong HPC Contract with Core42 w/ G42 Guarantee, 60MW HPC 2H25, and Project Financing Catalyst'

Compass Point analyst Chase White raised the price target on Terawulf Inc. (NASDAQ: WULF) to $6.50 (from $6.00) while maintaining a Buy rating.

The analyst comments "WULF provided an update to its HPC outlook and expects the 2.5MW WULF Den to be online in 2Q25, 20MW CB-1 building in 3Q25, and 50MW CB-2 during 4Q25. WULF also expects a slight change to its previous guidance for lease economics to $1.6M/MW (escalator of 3% annually resulting in $2m/MW lease rate by year 8), 75% EBITDA Margins as it scales up to 60MW, and higher build costs of ~$7.2M/MW per critical IT load, resulting in initial NOI yields of ~16.5%, resulting in a slight increase to our estimates. For BTC mining, we lowered our estimates to $42M in CY25/26 reflecting the increased SG&A guidance and return to normalized power prices of $0.05/KWh. We continue to believe that WULF closing its Project Financing will be a catalyst with the official launch expected to begin this week. We model WULF to achieve ~70% LTC financing @ 8% rates (SOFR +400bps) though suspect their could ultimately be upside that provides WULF with higher leverage and tighter spreads based on G42's signed parent guarantee of Core42 and Sovereign Wealth backing, making the credit more attractive for both bank debt and private creditors. Ultimately we view Core42 as a strong tenant with very little credit risk, which we reflect in the valuation @ discount rates and cap rates. WULF remains focused on delivering signed 60MW HPC capacity, which we think will ultimately lead to opportunities to sign additional capacity to Core-42 or will improve WULF's position among enterprise customers where demand is increasing. We note WULF increased its share buy-back, and raise our price target from $6.00 to $6.50 reflecting 2027 run-rate HPC MWs of ~200MW IT Load at $1.65M/MW, 75-80% GM (benefit from escalator) discounted by 10% to 2026, and use 15.5-16x multiple less equity portion less prepay portion of capex less CY25 net debt."

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