UBS Group Upgrades Applied Digital (NASDAQ:APLD) to Strong-Buy

Key Points

• UBS Group upgraded Applied Digital to “strong buy,” adding to generally favorable analyst sentiment. The stock has a “Moderate Buy” consensus rating and an average price target of $60.88, though analyst views remain divided.
• Applied Digital reported 406.3% year-over-year revenue growth to $240.35 million, but missed quarterly EPS estimates with a loss of $0.39 per share versus expectations of a $0.09 loss. Analysts expect the company to remain unprofitable this year.
• Shares opened at $27.23, well below the 52-week high of $50.72, while the company continues transitioning toward AI and high-performance-computing data centers. Key risks include substantial debt, funding needs, execution challenges and uncertainty over converting its reported $36 billion contracted lease value into cash flow.

Applied Digital (NASDAQ:APLD - Get Free Report) was upgraded by investment analysts at UBS Group to a "strong-buy" rating in a research note issued to investors on Wednesday, Zacks reports.

Several other research analysts also recently weighed in on APLD. Craig Hallum increased their price target on shares of Applied Digital from $75.00 to $79.00 and gave the stock a "buy" rating in a research report on Tuesday, June 9th. Zacks Research downgraded Applied Digital from a "hold" rating to a "strong sell" rating in a research note on Wednesday, August 26th. Wells Fargo & Company began coverage on Applied Digital in a research report on Thursday, September 17th. They set an "overweight" rating and a $50.00 price objective on the stock. Lake Street Capital boosted their price objective on Applied Digital from $70.00 to $90.00 and gave the company a "buy" rating in a research note on Tuesday, June 9th. Finally, B. Riley Financial reissued a "buy" rating and issued a $75.00 target price (up from $66.00) on shares of Applied Digital in a report on Monday, August 3rd. Four equities research analysts have rated the stock with a Strong Buy rating, twelve have issued a Buy rating, two have issued a Hold rating and two have assigned a Sell rating to the company. According to data from MarketBeat, the stock presently has a consensus rating of "Moderate Buy" and an average price target of $60.88.

Applied Digital Stock Performance

Shares of NASDAQ APLD opened at $27.23 on Wednesday. The firm's 50-day moving average price is $27.60 and its 200-day moving average price is $32.68. Applied Digital has a 52-week low of $19.00 and a 52-week high of $50.72. The company has a market cap of $7.94 billion, a PE ratio of -30.60 and a beta of 5.72. The company has a quick ratio of 4.01, a current ratio of 4.01 and a debt-to-equity ratio of 2.88.

Applied Digital (NASDAQ:APLD - Get Free Report) last announced its earnings results on Monday, July 27th. The company reported ($0.39) earnings per share for the quarter, missing analysts' consensus estimates of ($0.09) by ($0.30). Applied Digital had a negative net margin of 37.78% and a negative return on equity of 16.42%. The company had revenue of $240.35 million for the quarter, compared to analysts' expectations of $96.85 million. During the same quarter in the prior year, the firm posted ($0.24) earnings per share. Applied Digital's quarterly revenue was up 406.3% on a year-over-year basis. As a group, analysts anticipate that Applied Digital will post -1.09 EPS for the current year.

Insider Buying and Selling

In other Applied Digital news, Director Richard Nottenburg sold 75,000 shares of the firm's stock in a transaction dated Tuesday, August 4th. The stock was sold at an average price of $31.15, for a total transaction of $2,336,250.00. Following the sale, the director directly owned 133,378 shares of the company's stock, valued at $4,154,724.70. This trade represents a 35.99% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available through the SEC website. 9.50% of the stock is currently owned by corporate insiders.

Institutional Trading of Applied Digital

Several institutional investors have recently made changes to their positions in APLD. GAMMA Investing LLC increased its stake in Applied Digital by 28.5% in the 2nd quarter. GAMMA Investing LLC now owns 2,092 shares of the company's stock worth $78,000 after acquiring an additional 464 shares during the last quarter. Krilogy Financial LLC raised its holdings in Applied Digital by 4.1% during the 2nd quarter. Krilogy Financial LLC now owns 14,243 shares of the company's stock valued at $531,000 after buying an additional 561 shares during the period. Vermillion Wealth Management Inc. boosted its stake in Applied Digital by 29.4% during the first quarter. Vermillion Wealth Management Inc. now owns 2,563 shares of the company's stock worth $61,000 after buying an additional 583 shares during the period. Envestnet Asset Management Inc. raised its stake in shares of Applied Digital by 4.7% in the second quarter. Envestnet Asset Management Inc. now owns 13,333 shares of the company's stock valued at $497,000 after acquiring an additional 596 shares during the period. Finally, Handelsbanken Fonder AB boosted its stake in shares of Applied Digital by 1.0% during the 2nd quarter. Handelsbanken Fonder AB now owns 71,600 shares of the company's stock worth $2,671,000 after purchasing an additional 700 shares during the period. Hedge funds and other institutional investors own 65.67% of the company's stock.

Trending Headlines about Applied Digital

Here are the key news stories impacting Applied Digital this week:

• Positive Sentiment: UBS initiated coverage with a Buy rating and a $38 price target, citing constrained AI-compute supply, favorable power access and Applied Digital’s transition from cryptocurrency mining to high-performance-computing data centers. UBS views the company’s grid access and existing infrastructure as competitive advantages as AI demand accelerates. UBS initiates Applied Digital at Buy with $38 price target, citing AI infrastructure momentum
• Positive Sentiment: UBS also initiated Buy ratings on four comparable AI data-center operators, reinforcing a favorable sector outlook and potentially increasing investor interest in Applied Digital’s AI infrastructure strategy. UBS turns bullish on five AI data center stocks
• Neutral Sentiment: Applied Digital has reported approximately $36 billion of contracted long-term lease value and is highlighting strong economics on high-performance-computing projects. However, investors are still waiting for clearer evidence that the contracts will translate into cash flow and shareholder value. Should You Sell Your APLD Stock Now?
• Negative Sentiment: Analyst sentiment remains divided. A fair-value estimate was reduced from $73.36 to $68.35 amid concerns over contracted capacity, financing requirements and how much AI growth is already reflected in the valuation. Applied Digital Stock Sees Fair Value Cut As Analysts Split On AI Buildout
• Negative Sentiment: Redburn initiated coverage with a Neutral rating and a $22 target, implying substantial downside from recent trading levels. Investors also remain concerned about power and supply-chain constraints, lower yields on new deals and the capital needed to deliver the company’s backlog. APLD’s 250MW Question

Applied Digital Company Profile

Applied Digital Corporation NASDAQ: APLD develops and operates digital infrastructure designed to support high-performance computing (HPC), artificial intelligence (AI) and other compute-intensive applications. The company provides data center capacity and related services to customers that require substantial computing power, connectivity and energy resources.

The company's facilities are designed to support advanced computing workloads, including AI model development, cloud computing and digital asset-related applications.

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