MicroStrategy Poised for Growth With Strong Bitcoin Exposure and Software Expansion: Analyst

Barclays analyst Ramsey El-Assal initiated coverage on MicroStrategy Inc MSTR with an Overweight rating and a price target of $146.

El-Assal flagged the company’s unique differentiated vehicle that allows public company investors to gain exposure to bitcoin, resilient capital deployment model offering a long runway for continued bitcoin accumulation and protection from black swan liquidity events, software performance backed by a fast-growing TAM and demand for next-gen technology, the mix shift towards subscription services leading to higher-margin and recurring revenue and the software business’ high retention rates.

According to the analyst, MicroStrategy is the superior option for public-company investors looking for Bitcoin exposure.

The analyst flagged the company’s success in channeling the cash flows and balance sheet of a well-established business intelligence software provider to amass a ~$13 billion bitcoin pile.

El-Assal compared MicroStrategy to a bitcoin index fund capable of generating its own investment capital, helping investors gain exposure to the underlying bitcoin asset price and benefit from future self-funded accumulation.

MicroStrategy’s strategy appears capable of withstanding quite a bit of liquidity-related stress from potential future “crypto winters,” the analyst said, citing the blended average cost of debt and maturities.

The analyst expects MicroStrategy’s partnerships with large hyperscalers to help it maintain market share over time, thanks to the growing demand for business intelligence (BI) and artificial intelligence (AI).

The analyst projected fiscal 2024 revenue of $474 million and EPS loss of $(1.58).

Price Action: MSTR stock traded lower by 2.85% at $116.16 at he last check Friday.

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