TeraWulf has an upside of 72%, this analyst says

ATB Capital Markets analyst Martin Toner says TeraWulf’s (TeraWulf  Stock Quote, Chart, News, Analysts, Financials  NASDAQ: WULF) acquisition of the Muskie Data Campus gives the company a significantly expanded growth runway at a time when power availability remains the key bottleneck for hyperscale data centre development.

In his May 26 report, Toner maintained his “Outperform” rating on TeraWulf and raised his target price to $46.00 from $40.00, saying the transaction reinforces the company’s ability to secure, develop and contract large-scale power-backed infrastructure assets.

“By obtaining another site of this scale, complete with executed energy service agreements and a clear, multi-year pipeline to over 1 GW of power, WULF addresses the single largest constraint facing hyperscale development today: long-term, utility-scale power availability,” Toner said. “This transaction reinforces TeraWulf’s ability to obtain, develop and contract assets with velocity.”

The analyst said TeraWulf is more than an asset owner, and he believes the value of its operating model will be rewarded over time with a higher multiple.

The Muskie Data Campus covers 285 acres within the EastPark Industrial Park in Kentucky and is positioned to scale to more than one gigawatt of total data centre capacity. Development is expected to proceed in two phases aligned with regional grid infrastructure rollouts, with an initial 500-megawatt ramp beginning in the second half of 2028 and a further 500 megawatts targeted for the second half of 2030.

Toner said the acquisition also gives TeraWulf a second multi-hundred-megawatt hub in Kentucky, strengthening the company’s regional advantages through supportive state stakeholders, established transmission networks, favourable power markets and local workforce pipelines.

As part of the transaction, TeraWulf executed transmission infrastructure and energy service agreements under applicable Industrial General Service tariff structures. Kentucky Power, an American Electric Power company, is already constructing a dedicated 345-kilovolt substation tied to a 765-kilovolt transmission network, which Toner said supports utility-scale redundancy. The site is already properly zoned and requires limited preparatory work, which he said should help accelerate the construction timeline.

The Muskie campus will complement TeraWulf’s existing 480-megawatt Justified Data campus in Hancock County, further concentrating the company’s Kentucky footprint as it looks to capture demand from AI and hyperscale hosting customers.

Toner’s revised target is based on a blended average of a sum-of-the-parts valuation, a multiples-based approach and a discounted cash flow analysis. He values TeraWulf’s high-performance computing assets using a multiple of 20 times 2027 estimated EBITDA, while his DCF uses an unchanged weighted average cost of capital of 8.0% and terminal growth rate of 3.5%. The DCF implies a terminal EV/EBITDA multiple of 18.8 times in 2034.

Toner said his sum-of-the-parts valuation increased to $47.06 from $39.97, driven by an increase in the value of TeraWulf’s excess capacity to $15-billion from $10-billion.

The analyst expects TeraWulf to generate adjusted EBITDA of $166.7-million on revenue of $344.0-million in fiscal 2026. He expects those figures to rise to adjusted EBITDA of $754.9-million on revenue of $1.08-billion in fiscal 2027.

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