H.C. Wainwright optimistic on Sphere 3D shares despite recent revenue setbacks By Investing.com

On Monday, H.C. Wainwright adjusted its outlook on Sphere 3D Corporation (NASDAQ:ANY) shares, reducing the price target to $3.00 from the previous $4.00. The firm sustained its Buy rating on the stock.

The revision follows the company’s reported decrease in revenue for the June quarter, which was released late last week. Sphere 3D experienced a 33% sequential decline in revenue, earning $4.7 million compared to $6.9 million in March.

The decrease in revenue has been primarily attributed to the impact of the halving on the company’s operations, which included a fleet running 1.2Eh/s at the end of the quarter.

Despite this, Sphere 3D is expanding its fleet with approximately 360 new S21s being integrated with its hosting partners. The company has five hosting partners located in Texas, Iowa, and Missouri.

H.C. Wainwright’s forecasts account for the additional fleet, projecting a slight increase in operations to 1.25Eh/s using about 35MW of power. The analyst maintains a positive outlook, citing a Buy rating but adjusting the price target to reflect recent price actions. The revised price target of $3 is significantly discounted compared to the broader group and is based on a conservative sales estimate.

The analyst acknowledges the speculative nature of the investment but notes reduced risk due to favorable legal developments. However, the small scale of the company and its reliance on hosting partners are seen as factors that could contribute to investor concerns. The new price target represents a multiple of 3.3 times the firm’s updated fiscal year 2025 sales estimate of $19.5 million.

InvestingPro Insights

As Sphere 3D Corporation (NASDAQ:ANY) navigates through its financial journey, current InvestingPro data provides a deeper understanding of the company’s market position. With a market capitalization of $15.35 million, Sphere 3D is a relatively small player in its field. The company’s Price / Book multiple stands at a low 0.46, which could indicate that the stock is undervalued relative to its assets – a point investors might consider when assessing the company’s intrinsic value.

Despite the recent decrease in revenue, Sphere 3D has shown a notable revenue growth of 121.94% over the last twelve months as of Q2 2024. However, this growth is juxtaposed with a concerning quarterly revenue decline of 14.64% in Q2 2024. Additionally, the stock has experienced significant volatility, with a 6-month price total return of -62.4%, highlighting the risks associated with investing in the company.

InvestingPro Tips suggest that Sphere 3D is trading at a low revenue valuation multiple and is not expected to be profitable this year. These insights, combined with the company’s aggressive cash burn, could be crucial for investors looking to understand the potential long-term value and risks involved. For those seeking to dive deeper into the financial health and future prospects of Sphere 3D, additional InvestingPro Tips are available, providing a comprehensive analysis of the company’s financials and market position.

For a more detailed analysis and further insights, consider exploring the full range of InvestingPro Tips, with numerous additional tips available to help guide investment decisions.

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