Morgan Stanley initiated coverage of MARA Holdings Inc (NASDAQ:MARA) on Monday, assigning an Underweight rating and setting a price target of $8.00 - just under the stock’s then-trading level of $8.24. Data from InvestingPro shows MARA trading at a trailing P/E of 3.85.
The bank’s note outlines three specific reasons it sees limited upside for MARA’s efforts to convert Bitcoin-mining assets into data-center revenue streams. First, Morgan Stanley described MARA’s approach as "hybrid" rather than one focused narrowly on leasing large data-center capacity to hyperscalers. Second, the firm pointed to MARA’s strategy of maintaining significant exposure to Bitcoin price upside, rather than moving decisively away from commodity-like crypto exposure. Third, the analysts highlighted MARA’s limited transaction history in hosting data centers as a constraint on convincing customers and investors of the conversion thesis.
Those structural concerns were flagged notwithstanding MARA’s recent profitability. The company reported a diluted earnings per share of $2.12 over the last twelve months.
Morgan Stanley emphasized that Bitcoin mining economics remain the primary determinant of MARA’s valuation in its analysis. To value the mining operations, the bank applied a 5x P/E multiple to the business.
On the outlook for Bitcoin pricing inputs used in the valuation, Morgan Stanley constructed scenarios by sensitizing total crypto trading volume growth across a band of 6% to 30% annually. The firm used the midpoint of that range for its base case assumptions and used the high and low ends of the band to define bull and bear cases respectively.
Beyond the mechanics of the model, Morgan Stanley signaled broader reservations about the economics of Bitcoin mining. The note states that the "historical ROIC of the Bitcoin mining business has been unattractive," a view that shaped the selection of a conservative P/E multiple for the mining segment.
Market context included other notable developments in the crypto and asset-management landscape. CVC has agreed to acquire Marathon Asset Management in a transaction valued at up to $1.2 billion - comprising $400 million in cash and up to $800 million in CVC equity.
Meanwhile, the recent slide in Bitcoin’s price has pressured a range of cryptocurrency-linked equities. The downturn has weighed on shares of MARA and peers such as Riot Platforms, which have recorded notable declines. Other names mentioned as affected by the market move include Bitmine Immersion and Coinbase Global, which have also seen substantial drops in their share prices.
In contrast to Morgan Stanley’s cautious initiation, Compass Point has upgraded MARA to a Buy rating and maintained a $30.00 price target. Compass Point described the recent sell-off as an overreaction to Bitcoin’s price changes and pointed to MARA’s sizable mining capacity and energy resources as supporting a more constructive outlook.
The divergent analyst views underscore the heightened sensitivity of crypto-related stocks to Bitcoin price movements and to questions about how companies transition between pure mining exposure and more stable data-center or hosting revenue models.
Clear summary: Morgan Stanley initiated coverage on MARA with an Underweight rating and $8.00 target, citing a hybrid business model, concentrated exposure to Bitcoin prices, and limited hosting track record as constraints on upside. The bank used a 5x P/E multiple to value the mining operations and based Bitcoin pricing inputs on a total crypto trading volume growth range of 6-30% annually.
- Key points:
- Morgan Stanley starts MARA with an Underweight rating and an $8.00 price target; stock traded near $8.24 at initiation and shows a P/E of 3.85.
- Analysts cite MARA’s "hybrid" strategy, concentrated Bitcoin upside exposure, and limited data-center transaction history as constraints on a conversion thesis.
- Valuation is driven by Bitcoin-mining economics, with a 5x P/E multiple applied and Bitcoin scenarios modeled using 6-30% annual crypto trading volume growth bands.
- Risks and uncertainties:
- Profitability of Bitcoin mining - Morgan Stanley flagged weak historical ROIC for the mining business, raising uncertainty about future returns; this affects mining and energy sectors tied to crypto operations.
- Market volatility in Bitcoin and crypto trading volumes - assumptions about 6-30% annual growth in trading volumes create scenario risk for valuations, impacting crypto-related equities and financial services exposed to trading flows.
- Execution risk on data-center conversions - MARA’s limited transaction history in hosting raises uncertainty about successfully expanding into data-center leasing, affecting technology infrastructure and hosting markets.