Microstrategy, Inc. (NASDAQ:MSTR) was initiated with a Buy rating and $990 per share price target at Benchmark in a note to clients from the firm on Tuesday.
Analysts stated the stock is a timely play for the upcoming Bitcoin halving. The firm's price target for the stock is based on its assumption that the price of bitcoin will reach $125,000 at the end of 2025, up from yesterday's price of $54,578.
The rating and price target are "based on a sum-of-the-parts analysis that combines (1) our estimate of the year-end 2025 value of the company's bitcoin holdings and (2) our estimate of the year-end 2025 value of its business intelligence software business," explained Benchmark.
"Notably, the first three halvings were associated with bull runs in the price of bitcoin," they added. "During the year following the first halving in November 2012, the price of bitcoin rose from around $12 to nearly $1,000. After the July 2016 halving, bitcoin rallied from $650 to $2,550 in 12 months."
In addition, the firm feels the boost in demand for Bitcoin resulting from the launch of multiple spot Bitcoin ETFs, combined with the reduced pace of supply of coins resulting from the halving, "has the potential to drive the price of the cryptocurrency meaningfully higher during the next couple of years."
"While some observers have suggested that the introduction of spot bitcoin ETFs in the U.S. would weigh on MSTR’s share price, since equity investors who bought the stock as a bitcoin proxy have a new array of such proxies to choose from, the stock continues to offer investors a unique value proposition, in our view," Benchmark explained.