Key Takeaways
- • StoneX reiterated a Buy rating and $57.00 price target on Galaxy Digital Holdings Ltd. shares, according to analyst Mark Palmer, despite a sharp selloff in the stock.
- • Galaxy Digital shares fell approximately 30% over two weeks, including a 24.5% drop in the most recent week, leaving the stock at its 52-week low of $16.76.
- • The selloff was driven by concerns over the creditworthiness of CoreWeave, the neocloud company that is Galaxy's first and only signed tenant at its Helios AI data center campus in West Texas.
- • CoreWeave's unsecured bonds were yielding about 15% and its 5-year credit default swaps traded above 1,100 basis points at the end of the prior week, signaling elevated perceived credit risk.
- • Palmer argued the market is wrongly pricing Galaxy as a stressed neocloud, contending the lease economics favor Galaxy shareholders.
Summary
StoneX reiterated its Buy rating and $57.00 price target on Galaxy Digital Holdings Ltd. shares, according to a report by Investing.com citing StoneX analyst Mark Palmer. The reiteration comes as Galaxy Digital's stock has fallen approximately 30% over a two-week period, with the decline accelerating in the most recent week, when shares dropped 24.5%. The stock now trades at its 52-week low of $16.76.
The selloff has been driven by concerns about the creditworthiness of CoreWeave, a neocloud company that is the first and only signed tenant at Galaxy Digital's Helios AI data center campus in West Texas. At the end of the prior week, CoreWeave's unsecured bonds were yielding approximately 15%, and its 5-year credit default swaps were trading above 1,100 basis points, levels that indicate heightened perceived default risk.
Palmer said the market has concluded that a landlord to a stressed neocloud deserves to trade like one, but argued that this conclusion overlooks the reality of Galaxy Digital's situation and the extent to which the lease math favors shareholders. StoneX maintained its Buy rating on the stock. The Investing.com report also cited InvestingPro data suggesting the stock is undervalued at current levels.
The reiteration follows Galaxy Digital's second-quarter results, which included a GAAP net loss of $85 million and firm-wide adjusted EBITDA of negative $77 million. The company highlighted completion of phase one of its Helios data center. Compass Point raised its price target on the stock to $36 while maintaining a Buy rating, citing improving cryptocurrency market conditions and potential high-performance computing deals. H.C. Wainwright reiterated a Buy rating with a $40 price target, even though the second-quarter results fell short of expectations amid weak cryptocurrency prices.
The selloff has been driven by concerns about the creditworthiness of CoreWeave, a neocloud company that is the first and only signed tenant at Galaxy Digital's Helios AI data center campus in West Texas. At the end of the prior week, CoreWeave's unsecured bonds were yielding approximately 15%, and its 5-year credit default swaps were trading above 1,100 basis points, levels that indicate heightened perceived default risk.
Palmer said the market has concluded that a landlord to a stressed neocloud deserves to trade like one, but argued that this conclusion overlooks the reality of Galaxy Digital's situation and the extent to which the lease math favors shareholders. StoneX maintained its Buy rating on the stock. The Investing.com report also cited InvestingPro data suggesting the stock is undervalued at current levels.
The reiteration follows Galaxy Digital's second-quarter results, which included a GAAP net loss of $85 million and firm-wide adjusted EBITDA of negative $77 million. The company highlighted completion of phase one of its Helios data center. Compass Point raised its price target on the stock to $36 while maintaining a Buy rating, citing improving cryptocurrency market conditions and potential high-performance computing deals. H.C. Wainwright reiterated a Buy rating with a $40 price target, even though the second-quarter results fell short of expectations amid weak cryptocurrency prices.
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