H.C. Wainwright & Co. analyst Mike Colonnese initiated coverage of Bitcoin Depot Inc (NASDAQ:BTM) with a Buy rating and a price target of $6.

The analyst says that BTM has a proven track record of delivering strong revenue growth and profitability amid weak market conditions and notes that two-thirds of its customers are using its BTMs to acquire BTC for remittances or online purchases. 

Colonnese writes that BTM is poised to benefit from the rapid adoption of crypto, with the bitcoin market cap growing at a 75% CAGR since 2013 and BTM's largest cash-Bitcoin ATM network in the U.S. (around 23% market share). 

The analyst expects BTM to be acquisitive in the coming years in an industry ripe for consolidation to drive organic growth. 

Colonnese estimates revenues to grow at a 10% CAGR over the period 2022-2025, assuming total deployed kiosks grow to 6,800 by Q4 FY25 (vs. 6,351 as of June 30, 2023). 

The analyst sees revenue and EPS of $720.5 million and $0.16 for FY23, $771.5 million and $0.45 for FY24, and $868.8 million and $0.75 for FY25.

Colonnese expects adjusted EBITDA to grow at a 26% CAGR over the next three years to $82 million in 2025 from $41 million in 2022 on solid revenue growth and strong operating leverage. 

BTM will report Q3 FY23 earnings on November 13, 2023. 

Also Read: Bitcoin ATM Installations Witness Biggest Drop In History, Despite Bull Run In BTC Prices

Price Action: BTM shares are trading lower by 3.05% at $2.5789 on the last check Monday.