Roth MKM Starts Applied Digital at Buy After Steep Annual Drop
Roth MKM resumed coverage of Applied Digital with a Buy rating and a $35 target, implying 81% upside from the prior close after the stock lost 46% over a year. The target assumes about 10.3 times forward sales, close to the stock’s three-year average and well above its current 5.7 times multiple. Risks include a wider expected loss for fiscal 2027 and debt financing needs for three campuses, while revenue jumped 322% in the latest quarter but the net loss and interest expense also increased.
Roth MKM analyst Bryan Baratian reinstated Applied Digital at Buy on Oct. 21 with a $35 target, versus the prior close of $19.33. The shares had fallen 46% over a year. The target equals roughly 10.3 times forecast sales, near the three-year average of 10.6 times and above the current 5.7 times.
The latest quarter brought $341.9 million in revenue, up 322%, while the net loss reached $221.0 million. Debt stood at $6.4 billion against $3.7 billion in cash, and interest costs for the quarter were $77.4 million. Three campuses still require financing, and analysts recently increased their fiscal 2027 loss projection.
Roth MKM’s call could affect retail and institutional investors exposed to Applied Digital, while the company’s debt-funded data-center buildout may influence local power demand, construction jobs, and utility planning in host communities. A higher rate environment could raise financing costs, potentially delaying campuses and affecting suppliers and workers. Because the stock remains volatile and loss-making, outcomes may matter most to shareholders and lenders, with broader effects depending on whether projects proceed.