Iren (IREN +5.98%), a crypto miner that's been leaning harder into its data center operations, hasn't been an investor favorite over the past few trading sessions. It's struggling with several headwinds, notably the recent decline in the popularity of cryptocurrency, and a broad investor pull-back from artificial intelligence (AI)-linked companies (such as next-generation data center operators).
Compounding this, a prominent investment bank flagged several data center companies as promising investments, but Iren wasn't one of them. As of early morning Friday, the company's shares were down by nearly 11% week-to-date, according to data compiled by S&P Global Market Intelligence.
Getting real about REITs
That researcher was white-shoe investment bank Goldman Sachs, which on Thursday initiated coverage of several data center stocks. The company's prognosticator Michael Ng was bullish on data center real estate investment trusts (REITs) Equinix and Digital Realty Trust, flagging them both as buys.
Image source: Getty Images.
His take on Iren wasn't as optimistic, however. In Ng's estimation, the stock only rates a neutral, at a price target of $39 per share.
According to reports, the analyst finds much to like about Iren's business, including its numerous successes with data center build-outs. While its growth has been impressive, it is a well-known stock in the crypto miner-turning-data center operator space, so its valuations are high-- a major concern Ng expressed in his note.
NASDAQ: IREN
Key Data Points
Richly priced
I would share that concern, even though it's clear that there's a bright future ahead for the companies that can most effectively play in the next-generation data center sandbox. Iren does indeed have much going for it as a business, but it's not the only player in this game, and it's not yet clear it can pull ahead. Given all that, I'd agree with Ng that it seems expensive at current levels.
