Benchmark Gives Buy Call for MicroStrategy (MSTR) with Target Price of $990

In its research report on Tuesday, February 27, investment banking firm Benchmark initiated coverage of MicroStrategy Inc (NASDAQ: MSTR) giving out a target price of $990. The MicroStrategy (MSTR) stock price jumped by 10%, closing Tuesday’s trading session at $871, followed by a similar jump in Bitcoin price.

Benchmark’s forecast relies on an anticipated valuation of the company’s Bitcoin holdings and its business intelligence software activities by the end of 2025. Benchmark’s price projection factors in the potential approval of multiple spot bitcoin ETFs and the forthcoming halving, which could serve as positive catalysts for the Bitcoin price.

MicroStrategy is one of the largest corporate holders of Bitcoin as of date. Earlier this week, the company announced the purchase of an additional 3,000 Bitcoin worth a staggering $155 million. The total value of MicroStrategy’s Bitcoin holdings is currently $10 billion, of which $4 billion is unrealized profits. In their research report, Benchmark Senior Equity Research Analyst Mark Palmer said:

“Our price target for MicroStrategy is based on our assumption that the price of bitcoin will reach $125,000 at the end of 2025, and that move would be driven by increased demand resulting from the SEC’s approval in January of spot bitcoin ETFs in the US, and the impact of the fourth bitcoin halving, set to occur in late April.”

Palmer emphasized that the decreased rate of cryptocurrency supply due to the halving event has the capacity to significantly boost the price of digital assets over the next few years.

MicroStrategy Outperforms Bitcoin

Since the start of 2024, MicroStrategy and Bitcoin have exhibited remarkably similar returns, both showing a 28% increase so far. However, over the past year, MSTR has notably surpassed Bitcoin in performance. While Bitcoin has seen a 141% rise on the yearly chart, MSTR stock has surged by 242% during the same period.

A primary driver behind the surge in MSTR stock is the company’s substantial Bitcoin holdings on its balance sheet. Michael Saylor, the company’s executive chairman, has expressed the intention to continue accumulating more Bitcoin in the future. Furthermore, the stock price of the company is closely correlated with movements in the price of Bitcoin.

Analysts anticipate that MicroStrategy (MSTR) stock could potentially be included in the S&P 500 index shortly. Should this occur, it could lead to a significant influx of liquidity for MSTR stock.