GLXY wins price target raise at ATB Capital

Following the company’s first quarter results, ATB Capital Markets analyst Martin Toner has raised his price target on Galaxy Digital Holdings (Galaxy Digital Holdings Stock Quote, Chart, News, Analysts, Financials TSX:GLXY).

On May 14, GLXY reported its Q1, 2024 results. The company posted Net Income of $422-million, up 40% year-over-year.

Toner gave his take on the results.

“Before market open on May 14, GLXY reported Q1/24 net income of $421.7mm, above consensus of $198.9mm and our estimate of $392.5mm. The Company also reported Partners Equity of $2,191.6mm, in-line with our estimate of $2,197.5mm. Q1 counterparty trading revenue of $66mm increased 79% q/q, beating our estimate of $53.5mm and driven by a 78% q/q increase in trading volume. Galaxy Asset Management (GAM reported assets under management (AUM) of $7.8bn, a 50% q/q increase, and reported record quarterly management and performance fees of $17.8mm, a 113% q/q increase. GLXY’s Digital Infrastructure Solutions (GDIS) segment reported record mining revenue of $31.5mm, a 69% q/q increase, and reached 5.7 EH/s in hash rate capacity, a 41% q/q increase. Given Galaxy’s past, results this cycle have been relatively orderly, as evidenced by the Company’s NI beating our estimate by 10%. We believe today’s announcement that GLXY has achieved swap dealer status for derivatives trading is reason for optimism that Institutional trading by more and larger counterparties will contribute to consistent growth in volumes and revenues. The level of fee income in GAM and unrealized gains from the venture portfolio are also positive surprises.”

In a research update to clients May 14, the analyst maintained his “Outperform” rating on GLXY but raised his price target on the stock from $17.00 to $20.00, implying a return of 61.1% at the time of publication.

Toner thinks GLXY will post Net Income of $389-million on Operating Revenue of $292-million in fiscal 2024. He expects those numbers will be Net Income of $218-million on Operating Revenue of $334-million in fiscal 2025.

“Despite posting a slew of positive results, including record GAM performance and management fees, record mining revenue, and GGM crossing an important threshold in its derivatives trading business, management emphasized the gradual progress that is expected in this digital assets up-cycle,” the analyst noted. “Management stated that the long-term prospects for digital assets are strong, citing increased engagement from institutions and GLXY’s ability to borrow unsecured crypto for long periods of time as examples of the increased optimism. While the long-term outlook for digital assets remains strong, in the short term, management cautioned that volatility in BTC and corresponding earnings for BTC-related companies will remain. CEO Mike Novogratz stated his belief that crypto in a “consolidation phase” until the next set of market events bringing BTC higher. While GLXY’s segments are impacted by low volatility in BTC, management stated that the increased momentum in crypto gives the Company confidence to invest in growth and is a time to build.”