HIVE Blockchain has 156% upside, PI says

Its third quarter results fell below his expectations, but PI Financial analyst David Kwan thinks HIVE Blockchain (HIVE Blockchain Stock Quote, Chart, News: TSXV:HIVE) is still undervalued, if only a little less so.

On Wednesday, HIVE Blockchain reported its Q3, 2018 results. The company earned $149,724 on revenue of $3.27-million.

“In the third quarter of fiscal 2018, we made significant progress in our expansion plans,” CEO Harry Pokrandt said. “The company’s second acquisition in Iceland commenced operations, contributing to rising mining revenues and margins, and a transformational 2018 buildout schedule was finalized and fully financed, which will see a more than tenfold increase in energy consumption dedicated to mining activities compared to that which was operational at quarter-end. We continue to evaluate future mining sites in stable jurisdictions with access to reliable, clean and inexpensive power.”

Kwan notes that HIVE’s topline fell below his expectation of $4.1-million, in part due to the difference between the actual and expected date of the second Iceland data centre coming on-line. But the analyst says he remains bullish on the stock.

“Despite the more challenging cryptocurrency mining environment, we remain bullish on HIVE’s ability to succeed driven by its low cost operations and exclusive partnership with Genesis, amongst other things,” he says. “With its fully funded growth plan set to drive dramatic improvements in financial performance in the coming quarters, we believe the stock is attractively valued.”

In a research update to clients Thursday, Kwan maintained his “Buy” rating on HIVE, but lowered his one-year price target from $5.25 to $4.50, implying a return of 156 per cent at the time of publication.

Kwan thinks HIVE will generate Adjusted EBITDA of (all figures USD) $6.4-million on revenue of $13.2-million in fiscal 2018. He expects those numbers will improve to EBITDA of $55.1-million on a topline of $91.0-million the following year.