Hut 8 stock: Buy, Sell or Hold?

Roth Capital Partners analyst Bryan Baratian maintained his “Buy” rating and US$108.00 target on Hut 8 (Hut 8 Stock Quote, Chart, News, Analysts, Financials NASDAQ:HUT), saying the recent selloff in data centre stocks has created an attractive entry point despite weaker expectations for the company’s third-quarter results.

Baratian noted that Hut 8 shares had fallen approximately 25% since Roth reinstated coverage Oct. 7, broadly in line with other emerging data centre developers facing concerns about AI infrastructure financing.

“At $67.34, HUT trades near our revised approximately $65/share margin-of-safety value, implying little value for its pipeline and offering an attractive entry point,” Baratian said on Oct. 28.

The analyst lowered his third-quarter revenue forecast to US$76.9-million from US$96.5-million and his Adjusted EBITDA estimate to US$32.5-million from US$45.4-million. The revised estimates compare with consensus expectations of US$76.5-million in revenue and US$26.3-million in Adjusted EBITDA.

Baratian attributed the reduction primarily to lower expected uptime at American Bitcoin Corp. (ABTC), Hut 8’s Bitcoin mining affiliate. He now assumes 86% uptime across ABTC’s 25-exahash-per-second mining fleet, down from approximately 88% in the second quarter, reflecting electricity-use curtailments during the Texas summer. He estimates that each percentage point of uptime represents approximately US$800,000 in quarterly revenue.

Despite lowering his forecasts, Baratian expects Hut 8’s data centre development business to support substantial growth in 2027. He pointed to the company’s US$1.07-billion revolving credit facility, completed in September, as an important source of financing for its development pipeline. He expects the facility to fund approximately US$224-million in equity contributions for the second phase of Hut 8’s Beacon Point development and the initial payment for its planned acquisition of two Texas properties from Poolin.

Hut 8 received court approval in October to purchase Poolin’s Pecos and Pyote sites for up to US$180-million, including US$100-million at closing and up to US$80-million in payments tied to future data centre commercialization.

“We model the $100M payment in 4Q26, but exclude conversion upside and contingent milestone payments pending commercialization,” Baratian added. He believes the sites could eventually support AI data centre development, potentially allowing existing Bitcoin mining equipment to be relocated.

Baratian also identified regulatory uncertainty surrounding Texas data centre development as a valuation risk. His model incorporates potential delays related to the Nov. 3 gubernatorial election, including an additional one-year delay for Beacon Point Phase II.

“An Abbott win would remove only the election-year discount, lifting our margin-of-safety value to approximately $67/share,” he said.

Baratian’s revised sum-of-the-parts valuation assigns approximately US$65 per share to contracted assets and the existing business, with additional value attributed to development projects. His unchanged US$108 target reflects the company’s broader power and data centre portfolio, adjusted for project financing, development risk and potential dilution.

Hut 8 is scheduled to report third-quarter results Nov. 4.

Baratian expects Hut 8 to generate Adjusted EBITDA of US$72.6-million on revenue of US$299.8-million in fiscal 2026, improving to Adjusted EBITDA of US$435.5-million on revenue of US$646.2-million in fiscal 2027.

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