Berenberg lowers Northern Data stock price target on valuation update

Berenberg has lowered its price target for Northern Data AG (NB2:GR) to €40.00 from €43.00, reaffirming a Buy rating, after the company announced it is considering merger or acquisition proposals for its Taiga Cloud and Ardent divisions amid strategic interest from U.S.-listed companies. The revised valuation incorporates a sum-of-the-parts approach and peer comparison for Taiga Cloud, applying a 50% discount to CoreWeave. The firm maintains a positive outlook based on ongoing strategic interest and the divestiture of Peak Mining.

Analysis

Berenberg analysts have adjusted their price target for Northern Data AG (ETR:NB2:GR) downwards to €40.00 from €43.00, while importantly reiterating a Buy rating on the stock. This revision stems from a modified valuation approach, prompted by significant strategic interest from U.S.-listed companies in Northern Data’s core divisions, Taiga Cloud and Ardent, for which the company has confirmed it is evaluating merger or acquisition proposals. While no definitive decisions have been reached by management, this potential corporate activity, alongside the ongoing divestiture of its Peak Mining business, signals a period of substantial restructuring. Berenberg's updated valuation incorporates a sum-of-the-parts (SOTP) methodology combined with a peer-based comparison for the Taiga Cloud division, notably applying a 50% discount relative to its peer, CoreWeave. Despite the reduced price target, Berenberg maintains a positive outlook, underpinned by the continued strategic interest in Northern Data's assets and the progress of its business transformation efforts.

Key Decisions for Investors

• Investors should note Berenberg's maintained Buy rating, suggesting underlying confidence in Northern Data's prospects despite the reduced price target, potentially driven by the strategic M&A interest in its Taiga Cloud and Ardent divisions.
• Closely monitor developments regarding the potential merger or acquisition of Taiga Cloud and Ardent, as the outcome will be a significant catalyst, and the current valuation reflects a 50% discount for Taiga Cloud compared to its peer, CoreWeave.
• Consider the ongoing restructuring, including the Peak Mining divestiture and evaluation of M&A proposals, as key factors that could unlock value and reshape Northern Data's strategic focus, aligning with Berenberg's positive long-term view.