Morgan Stanley raised its Riot Platforms (NASDAQ: RIOT) price target to $43 from $36 on Thursday, following Riot's 191 MW critical IT lease at Rockdale. Byrd also lifted MARA (NASDAQ: MARA) to $6 from $5.50 and cut TeraWulf (NASDAQ: WULF) to $62.50 from $72. The firm maintained Overweight ratings on Riot and TeraWulf, an Underweight rating on MARA and an Attractive view of North American powered shell providers.
Based on Wednesday's closes, the targets imply 112% upside for Riot, 264% upside for TeraWulf and 38% downside for MARA. Morgan Stanley said earnings season had been positive for the group, supported by compute demand and premiums for near-term contractable power. The diverging target changes reflected signed lease economics, execution probabilities and fully diluted share counts; Morgan Stanley did not change its sector view.
Stay ahead of AI infrastructure deals. Get Blockspace in your inbox. Riot's August 10 lease covers critical IT capacity of 191 MW at its Rockdale campus in Texas under a 20-year initial term.
The unnamed frontier AI lab will provide $9.1 billion of contracted revenue, equal to about $455 million annually and $2.38 per critical IT watt. Morgan Stanley estimated $2.2 billion of construction cost, an 85% NOI margin and $387 million of annual EBITDA. That produces a 17.6% unlevered EBITDA yield on capex and estimated net equity value creation of $18.87 per watt.
Riot has obtained a $573 million interim non-recourse loan, while Morgan Stanley assumes eventual project debt of $1.75 billion, or 80% LTC. Riot now has 241 MW of contracted critical IT load across its two Rockdale leases. Morgan Stanley increased its modeled signed-lease NAV by about $4 billion, partly offset by removing roughly $2 billion of Rockdale capacity from its unsigned-site valuation.
Morgan Stanley disclosed that it owned at least 1% of Riot, TeraWulf and MARA as of July 31. The firm also said it expects to seek investment banking compensation from all three operators within the next three months.
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