Compass Point analyst Michael Donovan reiterated a Buy rating and $45.00 price target on Applied Digital (NASDAQ: APLD).

The analyst commented: "Yesterday after the market close, Applied Digital reported fiscal 3Q26 (February) revenues of $126.6M, in line with F2Q26. That headline, however, does not provide the cleanest read on the core business, as it included $18.1M of revenue from the cloud business planned for spinout and $18.9M of lower-margin tenant fit-out revenue tied to the final payment from one-time fit-out work at PF1 building 1. The better takeaway sat within the operating mix. Base rent increased to $44.1M in F3Q26 from $12.0M in F2Q26 as the first 100 MW building at Polaris Forge 1 contributed its first full quarter of lease revenue after fully energizing in F2Q26. The bitcoin hosting business also remained a meaningful contributor, with hosting revenue decreasing to $37.5M in F3Q26 from $41.6M in F2Q26. Altogether, that mix shift pushed adjusted EBITDA to $44.1M in F3Q26 from $20.2M in F2Q26 and adjusted operating income to $25.6M from $11.6M. More important, the quarter begins to show the earnings power of a platform that still has substantial contracted and marketed capacity ahead of it. Scarcity should increasingly favor Applied. As zoning friction, local pushback, and permitting complexity raise the bar for new U.S. data-center development, controlled sites that are already power-backed, utility-coordinated, and advancing through development should become more valuable. Applied controls those types of sites and continues to execute on current builds while locking up the long-lead assets needed to extend the pipeline. That leaves us confident additional deals should come, and we therefore reiterate our Buy rating and maintain our $45 price target."

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Shares of Applied Digital closed at $27.79 yesterday.