The average target price of IREN is 23 and suggests 41% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 26.0. This translates into 58% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 16.0. This is equivalent to 3% downside potential in the worst case. 

Iris Energy Limited owns and operates bitcoin mining data centers. It also provides high performance computing solutions, including Al cloud services. The company was incorporated in 2018 and is headquartered in Sydney, Australia.

Australia

IREN Limited

Financial Services

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

IREN reported revenue of USD 283mn in the last 12 months, up 124% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 14% from FY23 to USD -0.28. Market expects EPS to reach USD 0.09 in FY25.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 46ppts and its growth accelerated by 0ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 24.4% in the last 12 months, up from -2.8% in FY23. 

Historically, IREN has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -18.1%, down from -16.2% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to -2.8% in the last 12 months, an increase from -4.5% in FY24. The market analysts predict that RoA will be -128.8% in FY25, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to -4.0%, below the peers. The consensus estimate for FY25 for RoCE is -132.3%, again behind the peers. 

IREN Limited reported a return on equity (RoE) of -4.0% in the last 12 months, up from -6.1% in FY24. The market consensus projects an RoE of -185.4% in FY25, again behind its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.4 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

IREN has above average trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually stable and is unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to bleak profitability, negligible return on capital, and poor working capital management. We note resilient historical revenue growth, low margin volatility, solid cash flow generation, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, IREN is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, IREN is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITD. 

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IREN Limited

$ 16.48

2

IREN Limited

$ 16.48

2

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 16.48

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