The shares of Bitcoin Miner Core Scientific (CORZ) have been downgraded to neutral from a purchase by Broker HC Wainwright.
The brokerage has removed its stock price targets and notes that Core Scientific’s performance is more closely linked to CoreWeave’s trajectory.
Core Science Stock traded about $15, up 1.3% at the time of publication. Stock fell 18% yesterday, following contract news. CoreWeave was 2.6% lower.
AI Infrastructure Firm CoreWeave said it has agreed to buy Core Scientific in an all-stock transaction that values Bitcoin Miners at around $20.40 per share based on its recent closing price.
Brokers continue to consider their own core scientific sales estimates as conservative, especially as they are not considered in the planned HPC (High Performance Computing) buildouts next year, but have flagged some unresolved variables, including unresolved infrastructure sourcing.
Still, the company’s analysts are hoping to receive approval from shareholders of the transaction, with no indication of delays in the closing timeline.
HC Wainwright cites network hashrate volatility and volatility in the crypto market, characterizing core scientists as carrying “indigenous high-risk level cryptocurrency companies.”
Core’s diversified operations help offset some of its risks compared to smaller peers, but the company is currently exposed to CoreWeave’s AI adoption risk, customer concentration and leverage, the report says.
Other headwinds include potential dilutions, shortages of mining equipment, increased regulatory scrutiny, and operational hurdles.
On a more positive note, the expected contribution of HPC revenues in future quarters could help reduce the company’s sensitivity to Bitcoin price cycles and stabilize the results, the report added.
read more: Comprehensive bid for Core Science that could elicit scrutiny of CoreWeave shareholders: KBW
