Compass Point starts Applied Digital with a Buy, sees opportunity after selloff

As previously reported, Compass Point analyst Joe Flynn initiated coverage of Applied Digital (APLD) with a Buy rating and $10 price target The firm, which notes that its target offers 50% upside following the 28% selloff in Applied yesterday related to DeepSeek, believes the risk-reward of signing a 100-400MW lease with a hyperscaler in 2025 is more attractive and that the company’s recent Macquarie Asset Management Equity Partnership will help get a lease “over the finish line.” Following the selloff, the firm sees “an interesting opportunity to again buy into the stock to play the HPC datacenter lease signing catalyst,” adding that it thinks the upside opportunity “looks binary based on whether APLD can sign a 400MW lease in 2025 or not.” Using a 60%/40% probability gets to an expected value above the current stock price with a “free option” on the pipeline beyond 400MW, the analyst tells investors.