KBW Upgrades Core Scientific Following AMD Leases, Eyes 35% Return
Keefe, Bruyette & Woods upgraded Core Scientific (NASDAQ: CORZ) to Outperform from Market Perform following the announcement of a significant lease agreement with AMD. The analyst raised its price target to $28 per share from $25, implying a potential 35% return based on a reference price of $20.75. The leases cover 529 MW in total and are expected to generate over $14 billion in base contracted revenue with annual escalators of 2.5%. Deliveries will begin at Pecos, Texas, by mid-2027. KBW estimated the value of Core Scientific's contracted portfolio using cap rates between 6.7% and 8%, resulting in a valuation range from $23 to $20 per share. The bank also highlighted potential expansion opportunities through AMD’s reservation rights for an additional 1,925 MW by December 2028. However, risks such as delivery timing, power availability, supply chain issues, and customer performance remain significant concerns.
Topics: contracted revenue lease agreements price target stock upgrade