With the halving event less than two weeks away, Bitcoin is once again back above $70,000 and that should be good news for stocks correlated to the leading crypto asset’s performance.
None are more closely tied than MicroStrategy (NASDAQ:MSTR), whose chair and co-founder Michael Saylor is probably the world’s biggest Bitcoin bull.
Saylor has made purchasing as much BTC as possible his company’s top priority and that has been good news for the stock. MSTR shares are up by 140% year-to-date (and by 384% over the past year).
Assessing that performance, BTIG analyst Andrew Harte thinks there are three main reasons behind the gains: “1) the price of bitcoin has rallied… which benefits MSTR’s corporate strategy of acquiring and holding bitcoin (~214k in total), 2) accretive capital raises in the form of equity and convertible debt which has increased the number of bitcoin per share for equity holders, and 3) the implied premium of MSTR’s bitcoin holdings within a sum-of-the-parts (SOTP) valuation analysis has increased to more than 2x, compared to ~1.5x on average during the last year.”
For more than a month now, MSTR’s “implied BTC premium” has stayed above 2x. Although this exceeds typical historical levels, Harte believes investors are willing to pay such a premium, given some may be seeking exposure to Bitcoin but may not have direct access to the asset or the ETFs. Moreover, MSTR’s capacity to “accretively raise capital” so to acquire more Bitcoin adds support to this premium. In fact, Harte thinks the elevated implied premium has “settled into a new norm above 2x.”
And while Bitcoin’s price has surged by 384% over the past year, the upcoming halving – when the BTC mining rewards get slashed in half, an event that happens once every 4 years – has traditionally been the catalyst for a full-on crypto bull market.
For all the reasons mentioned above, then, Harte has now raised his MSTR price target from $780 to $1,800, suggesting the shares will climb another 19% higher over the coming months. Harte’s rating stays a Buy. (To watch Harte’s track record, click here)
All of Harte’s colleagues agree with that stance. The 3 other analyst reviews on file are all positive, making the consensus view here a Strong Buy. The forecast factors in one-year returns of 11.5%, considering the average price target stands at $1,686.67. (See MSTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
