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HC Wainright maintains Buy on CleanSpark with $18 price target

Analysts cited the company’s FY2019 in-line results, a positive growth outlook and a recent reverse stock split 

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Analysts see revenues increasing from $13.7 million in FY2020 to $128.6 million in FY2025

HC Wainright & Co is repeating a Buy rating on CleanSpark Inc (OCTMKTS:CLSKD) based on the company’s fiscal year 2019 in-line results and a positive growth outlook for 2020. 

Analysts Amit Dayal and Sameer Joshi, who raised significantly their price to $18 a share from $4, also noted the company’s recent one-for-ten (1:10) reverse stock split, which was undertaken to help it comply with the Nasdaq’s minimum bid-price requirements as it seeks to up-list. 

“We believe the reverse stock split allows the company to meet the final requirement of realizing the appropriate share price level to accomplish this uplisting, which we believe is imminent. Post this reverse split, the company has approximately 4.8M shares outstanding,” they wrote Thursday.

READ: CleanSpark receives $359,000 in new orders for its intelligent switchgear

But the analysts were quick to fixate on CleanSparks’ revenue figures for FY2019 and revenue estimates for FY2020 and beyond. 

For FY2019 ending on September 30, the Bountiful, Utah, company posted a 783% jump in revenue to $4.5 million, compared to $578,635 in the same period in 2018 — a clear indication CleanSpark is growing quickly.

Now the analysts see revenues increasing from $13.7 million in FY2020 to $128.6 million in FY2025, growing at a five-year CAGR (compound annual growth rate) of 56.5%.

“We believe CleanSpark’s backlog is currently around $5.0M, the majority of which is expected to be recognized by F2Q20 (quarter ending March 31, 2020). This should position the company to post another year of strong revenue growth, and accordingly we are projecting a nearly 201% YoY improvement in sales during FY2020,” the analysts wrote.

M&A 

The analysts also noted CleanSpark's current cash position of around $7.8 million and access to an additional $10 million in financing will help the company carry out its strategy to grow the company via mergers and acquisitions.

“We believe the company could act on this front in the next fiscal year, with a focus on expanding its software and recurring revenue portfolio,” they wrote.

The company, founded in 1987, runs on a software-as-a-service (SaaS) distribution model and helps build microgrids. CleanSpark’s mPulse software and control suite operates on-site in real-time, providing economic dispatch controls to maximize performance and resiliency operations to back-up critical energy loads in the event of a utility disruption.

The company’s stock recently traded up 1.8% to $5.70 a share in New York.

Contact the author: [email protected]

Follow him on Twitter @PatrickMGraham

Quick facts: Cleanspark, Inc.

Price: 1.1 USD

NASDAQ:CLSK
Market: NASDAQ
Market Cap: $5.35 m
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