MicroStrategy stock was surging Tuesday after a Benchmark analyst said he sees more upside to the shares as the software company buys up more Bitcoin.
Analyst Gives Buy Rating
Benchmark analyst Mark Palmer initiated coverage of MicroStrategy stock with a Buy rating and $990 price target on Tuesday, which implies 24% upside from the stock’s Monday closing price. That is also the highest price target given to the stock by the six analysts surveyed by FactSet, with an average of $794.17.
Stock Performance
Shares of MicroStrategy were rising 10% in premarket trading Tuesday to $877.90. Coming into the session, the stock has soared 204% over the last 12 months.
Reasoning Behind Bullish Call
Palmer wrote in a research note that this bullish call on the stock is based on “a sum-of-the-parts analysis that combines our estimate of the year-end 2025 value of the company’s bitcoin holdings and our estimate of the year-end 2025 value of its business-intelligence software business.”
Bitcoin Purchases
MicroStrategy is known for its strategy of buying up Bitcoin. According to a filing with the Securities and Exchange Commission (SEC) on Monday, from Feb. 15 to Feb. 25 of this year, the company acquired about 3,000 Bitcoins for around $155.4 million in cash at an average price of about $51,813 per Bitcoin.
Factors Driving Bitcoin’s Price Increase
These purchases come as the price of Bitcoin is on a tear. The cryptocurrency hit more than $57,000 on Tuesday, its highest level since 2021. The increase in the price of the digital currency has been caused by several factors—the possibility of lower interest rates, anticipation for the start of Bitcoin exchange-traded funds, and a change to how miners are paid, otherwise known as halving.
“Our price target for MSTR is based on our assumption that the price of bitcoin will reach $125,000 at the end of 2025, a move that would be driven by increased demand resulting from the SEC’s approval in January of spot Bitcoin ETFs in the U.S., and the impact of the fourth bitcoin halving, set to occur in late April 2024,” Palmer said.
