TD Cowen Upgrades Strategy (MSTR) Price Target to $400, Cites Bitcoin Accumulation

In brief

TD Cowen analysts have upgraded the price targets for shares of Strategy (MSTR) to $400 per share.

The upgrade comes as Strategy continues to add Bitcoin via its preferred equity stock offering, Stretch (STRC).

Shares of MSTR are down around 1% since trading began on Tuesday, changing hands around $164.

Analysts at TD Cowen think shares in Bitcoin treasury firm Strategy (MSTR) could jump as much as 139% to $400 per share in the next 12 months.

The new forecast reflects a $5 per share bump, up from the analysts’ previous $395 price target. TD Cowen’s bullish update comes one day after the company announced it added $2 billion worth of Bitcoin over the previous week.

“Strategy’s treasury operations continue to exceed expectations, with faster-than-anticipated Bitcoin accumulation and accretive balance sheet actions driving higher BTC per share and improved financial flexibility,” TD Cowen analysts wrote.

As it stands, shares in MSTR were down around 1.1%, trading around $164.79 shortly after the opening bell on Tuesday. At its current price, shares in the firm are now nearly 64% off their 52-week high of $457.22.

The positive re-rating for TD Cowen is in large part due to Strategy’s sustained ability to gain access to financial capital, highlighted by its preferred equity issuance of Stretch (STRC), which has allowed the firm to stack BTC in a manner that Bernstein believes is better for MSTR shareholders.

“Since the last earnings call, treasury activity has been dominated by preferred equity issuance, with ~$1.95B raised versus minimal common equity issuance, and substantially all proceeds deployed into Bitcoin purchases,” analysts wrote, adding that the firm has already outpaced its previous forecasts for Bitcoin purchases just midway through the quarter.

“Importantly, this activity continues to drive growth in BTC per share despite rising dilution, reflecting the accretive nature of the company’s financing model,” they noted.

Its preferred stock issuance allowed the firm to snatch up nearly 25,000 Bitcoin valued around $2 billion in the last week, extending its leading Bitcoin balance sheet to 843,738 BTC worth approximately $64.7 billion at the time of writing.

In addition to its massive Bitcoin purchase, Strategy also retired around $1.5 billion in convertible debt last week, a move analysts called a “clear positive for both equity holders and creditors.”

“We view this as an important signal of financial flexibility,” they wrote. “While Strategy may replenish portions of its USD reserve over time, we expect continued access to capital markets to support ongoing Bitcoin accumulation, rather than constrain it.”

Bitcoin treasury firm Strive Asset Management (ASST), which has followed in Strategy’s footsteps with the recent launch of a dividend-paying preferred equity product, also got a price target boost from TD Cowen.