Strategy (Ex-MicroStrategy) With Bullish Outlook, But Challenges Remain: Report

by Murtuza Merchant Benzinga Staff Writer

Zinger Key Points

Analysts emphasize Strategy’s Bitcoin acquisitions, capital raises, and accounting rule changes impacting financial reporting.
Strategy’s stock is viewed as a leveraged Bitcoin play, with its balance sheet strategy shaping investor sentiment and price targets.
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Strategy MSTR, formerly MicroStrategy, has drawn varied analyst reactions following its continued Bitcoin BTC/USD accumulation and capital-raising initiatives, with analysts highlighting both the potential benefits and the emerging challenges associated with this approach.

While the firm remains the largest publicly traded corporate Bitcoin holder, concerns over valuation premiums and leverage have led to price target adjustments from Bernstein, Cantor Fitzgerald and Canaccord Genuity.

Analyst Ratings And Price Target Adjustments

Bernstein: Raised price target from $290 to $600, maintaining an Outperform rating
Cantor Fitzgerald: Increased price target from $613 to $619, reiterating an Overweight rating.
Canaccord Genuity: Lowered price target from $510 to $409, maintaining a Buy rating due to valuation concerns.

Bernstein: Bitcoin Yield And Fair Value Accounting Shift

Bernstein's bullish outlook is tied to Strategy's Bitcoin yield projection, which has been revised from 6-10% to 15% for 2025.

The firm also notes that the adoption of Fair Value Accounting in 2025 will allow Strategy to report Bitcoin price appreciation directly as net income gains, leading to a $12.75 billion adjustment to retained earnings.

Also Read: Ethereum Faces ‘Intense Competition’ From Solana, Struggles To Compete With Bitcoin: JPMorgan

Cantor Fitzgerald: Capital Raising And Leverage Strategy

Cantor Fitzgerald acknowledges Strategy's aggressive capital-raising plan, which has secured $20 billion of its $21 billion equity and debt target by 2027.

The firm also highlights the Convertible Preferred Stock (STRK) issuance, which offers an 8% dividend and a 10:1 conversion ratio as a tool for additional liquidity.

Canaccord Genuity: Valuation Premium And Risk Concerns

Canaccord Genuity lowered its target based on Strategy's high equity premium to Bitcoin holdings, which, while peaking at 200%, has retraced to 110%.

The firm also warns of regulatory risks, Bitcoin price volatility, and high leverage as key downside factors.

Analysts remain divided on Strategy's valuation and future outlook, with bullish sentiment tied to Bitcoin exposure and financial transparency improvements, while concerns persist over leverage and sustainability of its premium relative to Bitcoin holdings.

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