Needham lifts Hut 8 target to $145 after second Beacon Point AI lease
Hut 8 Corp. (NASDAQ: HUT) secured a second 352 MW AI data-center lease at its Beacon Point campus, prompting Needham to raise its price target to $145 from $128 while reiterating its Buy rating.
The 15-year agreement doubles the undisclosed investment-grade tenant's capacity at the Nueces County, Texas, campus to 704 MW of critical IT load. Needham analyst John Todaro said the leases offer among the strongest colocation economics signed in 2026.
Hut 8 shares closed at $100.93 on July 20, up 10.37% for the session. Needham's previous reference price was $91.45 as of July 17.
The second Beacon Point lease carries a $9.8 billion base-term contract value and substantially matches the first phase's terms. Both are triple-net leases with annual base-rent increases of 3%.
Together, the agreements give Beacon Point a base-term contract value of $19.6 billion. Hut 8 expects average annual net operating income of approximately $1.31 billion once both phases stabilize, equal to roughly $1.86 million per contracted IT megawatt.
The campus has 1,000 MW of utility capacity under an AEP Texas interconnection agreement. Its two leases cover 704 MW of IT capacity, with the difference reflecting the power required for supporting infrastructure. Initial campus energization is still planned for the first quarter of 2027, while Phase 2 data-hall delivery is expected to begin in the second quarter of 2028.
"The real test of our power-first approach is what our partners are willing to commit against it," Hut 8 CEO Asher Genoot said. "Our tenant at Beacon Point chose to double its footprint at the site, the strongest validation an asset can receive."
Needham increased its calendar 2028 revenue forecast to $1.70 billion from $1.44 billion. Its adjusted EBITDA estimate rose to $1.32 billion from $1.07 billion, while its 2026 and 2027 forecasts remained unchanged.
The analyst's model assumes Phase 2 contributes 140 MW during 2028 as capacity ramps. Needham estimates construction will cost approximately $3.5 billion, based on capital spending of $9 million to $11 million per critical megawatt, with about 85% financed through additional debt.
Needham based its $145 target on 19 times discounted 2028 enterprise value to adjusted EBITDA. The firm identified construction delays, cost overruns and weaker bitcoin prices as risks to its valuation.
The new agreement raises Hut 8's contracted AI portfolio to 949 MW across Beacon Point and the 245 MW River Bend campus in Louisiana. Those leases carry combined base-term contract value of $26.6 billion and expected average annual NOI above $1.75 billion once stabilized.
Needham disclosed that Hut 8 received investment banking services from the firm during the preceding 12 months and that the firm makes a market in Hut 8 shares.