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Bernstein starts MicroStrategy at Outperform, sees 95% upside in stock

Published 06/14/2024, 06:03 AM
Updated 06/14/2024, 06:06 AM
© Shutterstock Bernstein starts MicroStrategy (MSTR) at Outperform, sees 95% upside in stock
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Analysts at Bernstein started research coverage on MicroStrategy (MSTR) with an Outperform rating and a price target of $2,890, which implies roughly 95% upside from the stock’s latest closing price.

In its note, the investment firm said MicroStrategy is “building the world’s largest Bitcoin company.”

“Since August 2020, MSTR has transformed from a small software company to the largest Bitcoin holding company, owning 1.1% of world’s Bitcoin supply worth ~$14.5Bn,” analysts wrote.

“MSTR’s founder chairman, Michael Saylor has become synonymous with brand Bitcoin and has positioned MSTR as a leading Bitcoin company, attracting at-scale capital (both debt and equity) for an active Bitcoin acquisition strategy,” they added.

Bernstein highlights that MicroStrategy has positioned itself as an ‘active-leveraged’ Bitcoin strategy compared to passive spot ETFs. Over the past four years, MSTR's active strategy has resulted in a higher Bitcoin per equity share, increasing from 6 Bitcoin per diluted share in Q4 2020 to approximately 10 today, marking a 67% growth.

In dollar terms, MSTR's Bitcoin net asset value (NAV) per share has grown nearly fourfold, surpassing the 2.4x growth in Bitcoin's spot price.

Bernstein has revised its Bitcoin price forecast, projecting a cycle-high of $200,000 by 2025, up from the previous $150,000 estimate. The adjustment is driven by unprecedented Bitcoin demand, expected to reach $190 billion in assets under management (AUM) by 2025, compared to $60 billion today, primarily through ETFs managed by the world's leading asset managers.

Moreover, constrained Bitcoin supply supports this forecast, analysts said. Their base case estimates Bitcoin at $200,000 by 2025, $500,000 by 2029, and $1 million by 2033.

“We believe MSTR’s long term convertible debt strategy allows it enough time to gain from Bitcoin upside, with limited liquidation risk to its Bitcoin on balance sheet.”

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