Bernstein Assigns Outperform Rating to MicroStrategy, Boosts Bitcoin Target by 33%

Bernstein brokerage firm has initiated stock coverage for MicroStrategy’s MSTR, highlighting an outperform rating.  

The firm’s analysts have also demonstrated optimism in the Bitcoin price, increasing their target by 30% by the end of 2025.

Bernstein Initiates MicroStrategy Stock Coverage

Research and brokerage firm Bernstein has initiated stock coverage for MicroStrategy’s MSTR. The firm assigned it an outperformance rating with a price target of $2,890. The shares closed at around $1,484 on Thursday.

Bernstein cited the potential for significant growth for the business intelligence and software company.  It added that MicroStrategy’s Bitcoin Net Asset Value (NAV) could record a 50% premium by 2025. This is based on the firm’s long-term investment strategy in Bitcoin and the performance of its convertible debt.

According to Bernstein, the company’s strategy of leveraging long-term convertible debt provides ample time to benefit from a possible surge in Bitcoin price. It could also maintain a limited risk of liquidating its Bitcoin holdings.

Also Read: Top 11 Public Companies Investing in Cryptocurrency

The convertible senior notes would be value-adding where holders can convert their investment into company stock. The notes also ensure priority in repayment over other debts and equity on the off chance that bankruptcy occurs. Essentially, it is structured as unsecured and senior.

MicroStrategy has also set interest payments on a semi-annual basis. The full maturity of the principal is set for June 2032 unless actions such as redemption or conversion occur sooner.

MicroStrategy currently holds 214,400 BTC, which represents 1.1% of the total global Bitcoin supply, valued at approximately $14.5 billion. Over the past four years, the company has expanded its BTC portfolio, transitioning from a small software firm to a significant player in the cryptocurrency market. Additionally, MicroStrategy plans to purchase more Bitcoin through a $500 million bond sale.

Bernstein Raises Bitcoin Price Target

The broker also extrapolated its target for the Bitcoin price by 30%, from $150,000 to $200,000 by the end of 2025. It attributes this optimism to growing demand for BTC spot ETFs. This expected demand contributed to the brokerage firm’s optimism for MicroStrategy.

“Microstrategy positions itself as an active leveraged Bitcoin strategy versus passive spot exchange-traded funds (ETFs),” the report said, adding that over the last four years the company’s active strategy has produced a higher BTC per equity share.

Meanwhile, BTC spot ETFs continue to drive demand with some of the world’s leading asset managers issuing the financial instruments. BlackRock, Fidelity, and Franklin Templeton boast nearly $190 billion in assets under management (AUM).  

“Around $15 billion of net new flows have been brought in by the ETFs combined. We expect Bitcoin ETFs to be equivalent to approximately 7% of Bitcoin in circulation by 2025 and nearly 15% of Bitcoin supply by 2033,” Bernstein analysts wrote.

Read more: Bitcoin (BTC) Price Prediction 2024/2025/2030

For the base case, the experts say Bitcoin price could reach $500,000 by the end of 2029 and $1 million by 2033. At the time of writing, BTC is exchanging hands for $66,859, down almost 2% in the past 24 hours.

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