Benchmark has raised its price target for MicroStrategy's stock from $215 to $245.
Analyst Mark Palmer argued the value of the company's bitcoin holdings and its software business will continue to increase.
He also believes that the company's high stock price is justified as it provides more value than just holding massive amounts of bitcoin.
Bears on MicroStrategyâs (MSTR) high stock price thanks to its perky valuation compared to the amount of its bitcoin {{BTC}} holdings are overlooking the companyâs âuniqueâ shareholder value, investment banking firm Benchmark said in a research report on Friday.
âWe believe the ability of MSTR to generate compounding yield on its bitcoin holdings, using what management describes as âintelligent leverage,â differentiates its stock from alternative means of gaining exposure to bitcoin such as spot bitcoin ETFs,â Benchmark analyst Mark Palmer wrote.
Already bullish on the stock, Palmer reiterated his buy rating and lifted his price target to $245 from $215. Alongside a rise in the price of bitcoin to $68,400, MSTR shares are higher by 6.6% Friday to $206.19.
Led by Executive Chairman Michael Saylor, the stock of self-described Bitcoin Development Company currently trade at a 2.4X premium to the value of its bitcoin holdings, with some traders thusly believing that holding the equity instead of BTC itself (or the spot ETFs) is a bad move.
MicroStrategyâs net asset value (NAV) is calculated by dividing MSTR's market capitalization by the value of its bitcoin stack. The NAV premium recently touched a new high of 2.5 times its bitcoin holdings, with a company market cap north of $41 billion against bitcoin holdings of around $17 billion.
Benchmark believes MicroStrategyâs business model justifies the premium to NAV and that traders should focus on the companyâs BTC Yield. Introduced by Saylor and team earlier this year, Bitcoin Yield tracks the effectiveness of bitcoin investments by measuring the percentage change over time of the ratio between MSTRâs bitcoin holdings and its fully diluted share count. The Bitcoin Yield stood at 17.8% through September 19 compared to 1.8% and 7.3% in 2022 and 2023, respectively, according to Benchmarkâs data.
