HIVE Blockchain is worth $5.25 a share, PI says

Cryptocurrencies are an amusement park, but HIVE Blockchain (TSXV:HIVE) is a ride that everyone should be lining up for, PI Financial analyst David Kwan says.

Last Monday, Kwan initiated coverage of HIVE with a “Buy” rating and one-year price target of $5.25, which implied a return of 88 per cent at the time of publication and much more in the week that has followed.

Kwan says HIVE checks all the boxes that investors should be looking for in the space.

“Some of the key attributes of a successful miner are cheap power, a cool climate, and a politically stable jurisdiction,” the analyst says. “With operations in Iceland and Sweden and its partnership with Genesis, we believe HIVE checks all of these boxes and will be one of the lower cost miners, enabling them to generate stronger margins and cash flow in the good times and better weather the down times.”

Kwan thinks HIVE will generate Adjusted EBITDA of (All figures USD) $11.7-million on revenue of $17.4-million in fiscal 2018. He expects those numbers will improve to EBITDA of $73.5-million on a topline of $1016.3-million the following year.

“Our target price is based on 15x our CY19 Adjusted EBITDA estimate,” Kwan explains. “In what is likely to remain a highly volatile sector, we believe HIVE is well positioned to outperform its peers given its low cost operations in politically stable jurisdictions and its strategic and exclusive partnership with cryptocurrency mining leader Genesis, which is a key competitive advantage in our view.”