Canaan (NASDAQ:CAN) could be a five-bagger from current levels, and Benchmark analyst Mark Palmer is kicking off coverage of the ADRs with a Buy rating and a $3 price target.
The shares are down about 72% year-to-date and closed yesterday at $0.62.
Canaan's dual strategy is focused on the development of ASIC bitcoin chips and rigs, and the expansion of its self-mining operations, especially in the U.S., Palmer pointed out.
"CAN's vertically integrated approach differentiates it within the bitcoin mining space while positioning it to capitalize on both chip/rig sales and proprietary mining revenues," the analyst wrote.
Palmer added that Canaan's foray into home mining rigs has diversified the company's revenue streams. Moreover, Canaan is rapidly expanding its self-mining capacity in the U.S. and globally.
"While the company derived just 16.3% of its 2024 revenues from its self-mining operations, it intends to increase the total computer power driving its self-mining operations by mid-2025 to 10 EH/s in North America and 15 EH/s globally."
Palmer noted that Canaan has a stack of 1,408 bitcoin with a current value of about $133 million, or nearly 70% of its current market cap, which should be supportive of the company's valuation.
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