Benchmark reiterates buy rating on Canaan stock with $2 price target

Benchmark reiterated its buy rating on Canaan Inc. with a $2.00 price target, citing undervalued shares trading at $0.63 despite a healthy balance sheet and potential upside from negative investor sentiment; this valuation is based on a 1x enterprise value to revenue multiple applied to its fiscal year 2025 revenue estimate of $533.5 million, plus the market value of the company’s unrestricted bitcoin holdings. Recent positive developments include a 25% increase in Bitcoin production for May 2025, record hashrates, executive share purchases, and a $30 million stock repurchase program, though a $100 million preferred share financing agreement was terminated and Northland initiated coverage with a Market Perform rating.

Analysis

Benchmark has reiterated its buy rating and a $2.00 price target for Canaan Inc. (NASDAQ:CAN), contrasting sharply with the stock's current trading price of $0.63 and its market capitalization of $288 million. This price target implies substantial upside, particularly as Canaan's shares have declined 73% over the past six months and trade at only 19% of their 52-week high. Benchmark’s valuation relies on a 1x enterprise value to fiscal year 2025 revenue estimate of $533.5 million, plus the market value of Canaan's unrestricted bitcoin holdings, suggesting the current stock price reflects "extremely negative investor sentiment and/or indifference." While InvestingPro assigns a weak Financial Health Score of 1.41, Canaan maintains a healthy current ratio of 1.5 and holds more cash than debt. Recent operational highlights include a record 109 bitcoins produced in May 2025, a 25% monthly increase, and peak installed computing power with 7.27 EH/s operational and 8.75 EH/s installed, despite increased tariffs. Further positive signals include insider purchases by CEO Nangeng Zhang and CFO James Jin Cheng, who acquired 817,268 ADSs at an average of $0.76, and a board-approved $30 million stock repurchase program. However, a $100 million preferred share financing agreement was mutually terminated due to market conditions, and Northland initiated coverage with a Market Perform rating. Canaan aims to expand self-mining operations to 10 EH/s in North America and 15 EH/s globally by mid-2025, indicating a focus on growth despite mixed signals.

Key Decisions for Investors

• Investors should consider the significant valuation disconnect between Benchmark's $2.00 price target and the current stock price, viewing the depressed shares as a potential high-conviction, contrarian opportunity sensitive to any positive news.
• Monitor Canaan's progress towards its FY2025 revenue target of $533.5 million and its hashrate expansion goals (10 EH/s North America, 15 EH/s global by mid-2025), as these are key underpinnings of the bull case.
• Evaluate the impact of the terminated $100 million financing agreement against positive indicators such as insider buying, the stock repurchase program, and operational achievements like record Bitcoin production when assessing risk and potential entry points.