Cryptocurrency mining equipment maker Canaan (CAN) is entering a strong phase of growth, according to Wall Street broker Benchmark, which raised its price target for its American Depositary Receipts (ADRs) from $2 to $4 and reiterated its rating on the stock.
Shares rose 5% to around $1.79 in early trading Thursday.
Benchmark analyst Mark Palmer said the company's outlook brightened after Nasdaq confirmed that Canaan had returned to compliance with listing rules and eliminated significant overhangs that had weakened liquidity and investor interest.
Once this issue is resolved, there will be a renewed focus on improving fundamentals, particularly the growing demand for Avalon mining rigs and the expansion of Bitcoin self-mining operations, Palmer said.
Analysts pointed to the increasing traction of its Avalon product line as evidence that the company is regaining market share in the mining hardware space, highlighted by Canaan's largest U.S. order in three years for more than 50,000 Avalon A15 Pro units.
Palmer also mentioned the continued purchase of the immersion-optimized A1566I rig by CleanSpark (CLSK) and cited the compact Avalon Q as a future possibility in the consumer mining space.
On the self-mining front, Canaan's September update showed a deployed capacity of 9.3 exahash per second (EH/s), 92 bits of Bitcoin mined in the month, and holdings of approximately 1,582 BTC and 2,830 ETH in digital assets.
Benchmark said the company's average electricity cost of $0.042 per kilowatt hour (kWh) remains the most competitive in the industry and should continue to decline due to improvements in energy aggregation and site selection.
Benchmark said Canaan is positioned for further share price growth amid compliance issues, expected shipments of 50,000 Avalon A15 Pro rigs in the fourth quarter, and a growing low-cost self-mining footprint.
The report added that recent stock declines provide an attractive entry point.
read more: Canaan stock soars more than 12% after winning biggest U.S. order in three years
