TD Cowen increased its target price for Strategy (MSTR) from $300 to $400. The firm cited strong bitcoin growth and a new financing strategy as the main drivers behind potential gains. The new price target is based on shares currently trading at $166. This implies an increase of over 140%.
The brokerage kept its buy rating citing a faster-than expected increase in bitcoin purchases, and changes in the capital structure to support growth in bitcoin per shares. Michael Saylor is the executive chairman of Strategy. holds The value of 843 738 BTC is close to $64 billion. This position represents over 4% of total bitcoin cap.
Analysts noted The company’s bitcoin purchase has exceeded previous forecasts during this quarter. Strategy purchased 24,869 BTC between May 11-17 for approximately $2,01 billion. TD Cowen expects that the company will purchase more than 100,000 BTC during the second quarter alone of 2018.
Bitcoin per 1,000 fully dilutive shares is a central metric in the firm’s hypothesis. It has grown from 1.95 by the end of the year 2025 to 2.21. This rise suggests that the accumulation of bitcoins has exceeded dilution due to share issuance. Investors who follow Strategy’s aggressive strategy for capital have expressed concern about this.
Strategy’s preferred Equity
Recently, the company has used preferred equity This dynamic has been influenced by the issuance of preferred shares. Strategy has raised approximately $1.95bn through the issuance of preferred shares in its second quarter. The majority proceeds were used to purchase bitcoin. TD Cowen considers this method to be less dilutive and better for shareholders than issuing common shares.
Stratégie has also taken measures to enhance its credit rating. The company repurchased The company is selling convertible notes worth $1.5bn at a significant discount. This reduces its future refinancing risks and helps limit potential share dilution. Analysts hailed the deal as good news for creditors and equity holders.
TD Cowen has developed a valuation framework that incorporates a projected gain in bitcoin and includes expected debt and preferred equity obligations. The company projects gains related to bitcoin of over $15 billion by 2026. This supports the firm’s higher price target.
The stock of Strategy remains volatile, and is closely tied to the bitcoin market. The shares have dropped by about 60% in the last year, and are now well below their high of $450. Bitcoin’s recent drop has also had a negative impact on this stock. It is now viewed as a proxy asset for bitcoin.
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Source: bitcoinmagazine.com
