Bank of America more than doubled its price target on CoreWeave and... downgraded the stock

I’ve been doing this writing-about-stocks thing for a while, and cannot remember ever seeing something quite like this:

Bank of America analysts hiked their price target on CoreWeave by 143%, to $185 from $76, while simultaneously cutting their rating on the stock to “neutral” from “buy.”

That $185 price target is by far the highest on Wall Street. None of the analysts with a “buy” rating on the stock have updated their price targets since June 3; most haven’t since mid-May.

At its essence, this is a strict valuation call by Bank of America.

“We acknowledge there are positive developments including: (1) a new hyperscaler customer; (2) expansion on OpenAI agreement; and (3) debt raise at lower cost of capital,” analyst Brad Sills wrote. “As such, we raise our price objective to $185 from $76. However, with stock trading at 25x CY27e EBIT, a premium to the peer group at 16x, we believe much of the upside is priced in.”

Kudos to Sills for actually marking views to the new market realities, unlike most of his peers.

While CoreWeave recently raised debt at an incrementally lower interest rate, its significant capex plans mean the company will need to raise much more in the future, per Sills, who believes “the AI infrastructure capex growth rate is peaking” overall.

The recently IPO’d cloud computing company has become a new favorite of retail investors, particularly in the options market, and its supply is currently artificially suppressed. Per Bloomberg, a little under 13% of shares outstanding are available to be traded (or part of the “float,” as it’s known) in light of post-IPO lockup restrictions on selling.