Story
MicroStrategy Stock Gains as Citi Hikes Price Target to $240
Summary
Citi analysts significantly raised their price target for MicroStrategy, citing expectations for a higher Bitcoin price and an expansion in the company's valuation multiple relative to its crypto holdings.
Shares of MicroStrategy (MSTR) rose in premarket trading Friday after analysts at Citi substantially increased their price target on the business intelligence and Bitcoin-holding company to $240 from a previous target of $136.
Citi's Bullish Thesis
In a note to clients, Citi attributed the higher valuation to a more optimistic outlook for Bitcoin and MicroStrategy's valuation relative to its digital asset holdings. The firm's analysis suggests the new target implies a significant potential upside, driven by two main factors:
- A 34% upside contribution from an anticipated increase in Bitcoin's price over the next 12 months.
- A 16% upside contribution from an expansion of the company's multiple net asset value (mNAV) from its current levels.
Following the news, MicroStrategy's stock was up 2.7% in premarket trading, as reported by Investing.com.
A Closer Look at the Valuation
AdCiti's updated model includes a key change to its valuation metric, raising its "Bitcoin Yield Multiple" to 4.0x from 2.5x. This adjustment resulted in a revised mNAV assumption of 1.24x, up from 1.065x previously.
The bank noted that historical trends for MicroStrategy's mNAV have been in the 1.25x to 1.50x range when Bitcoin's price holds above the $85,000-$90,000 level. However, Citi stated it remains more conservative than these historical trends, citing concerns over the company's "dilutive cash reserve build."
Revised Yield Projections
Looking ahead, Citi improved its fiscal 2027 Adjusted Bitcoin Yield estimate by approximately 190 basis points to around 5.9%. This long-term optimism follows a downward revision for the firm's fiscal 2026 Adjusted Bitcoin Yield, which is now projected at -3.3%.
The negative forecast for fiscal 2026 is a result of MicroStrategy's cash reserve accumulation and anticipated Bitcoin sales in the third quarter of that year, according to the analyst note.
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