Northern Data’s Business Transformation and Growth Prospects: A Buy Rating from Berenberg with a 53.2% Upside

Frankfurt-based tech company Northern Data, known for its bitcoin mining operations, has made a significant shift in its business model towards cloud solutions and data center infrastructure. This strategic move has garnered the attention of investment bank Berenberg, which has initiated coverage of the company’s stock with a Buy rating and a price target of 39 euros ($41.84) per share, signaling a potential 53.2% upside from the current share price.

Northern Data, listed on the Frankfurt Stock Exchange, operates three core divisions: Peak Mining for bitcoin mining, Taiga Cloud for cloud computing, and Ardent Data Centers for data center infrastructure. While the market has primarily focused on the company’s bitcoin mining operations, Berenberg believes that the growth prospects for Taiga Cloud’s offerings have been overlooked.

The company, formerly known as Northern Bitcoin, has a history of business transformations. Initially a pharmaceutical broker for Asian markets, Northern Data shifted its focus to crypto mining operations in early 2018. The recent acquisition of a data center in Pittsburgh and advancements in liquid-cooling technology by its subsidiary Ardent Data Centers have positioned Northern Data for further growth and profitability.

Berenberg analysts Gerhard Orgonas and Jenna Xu are optimistic about Northern Data’s future, citing the company’s investments in liquid-cooling mining technology and expansion plans in North Dakota and Texas. They anticipate Peak Mining to achieve revenues exceeding 170 million euros next year with adjusted margins above 40%. However, it is the potential of Taiga Cloud that has analysts excited, with forecasts of annual revenues of around 400 million euros and adjusted profits of approximately 290 million euros from 2026 onwards.

Founder and CEO Aroosh Thillainathan’s confidence in the company is evident through his plans to acquire shares worth up to 30 million euros this year. As of March 21, Thillainathan’s stake in Northern Data Group has increased to 3.8 million shares, representing approximately 7.15% of the business’ current share capital.

With a strong focus on cloud solutions and data center infrastructure, Northern Data is poised for significant growth and profitability in the coming years, making it a company to watch in the tech industry.