(Bloomberg) — MicroStrategy Inc.’s 150% surge — driven by a big bet on Bitcoin — could climb further as the cryptocurrency soars, according to BTIG analysts.
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Analyst Andrew Harte raised his price target to $1,800 on Friday, implying shares could advance at least another 10% from recent trading. That’s more than double its previous target of $780.
Wall Street’s targets for the software sector have largely fallen by the wayside over the past month as shares of MicroStrategy have soared. With a stock of over 214,000 Bitcoins as of March 18, the stock has followed the largest digital asset higher, even outpacing its gains. Price targets from the four analysts tracked by Bloomberg trail the intraday record of $1,999.99 set in March.
Premium investors are willing to pay for the company’s exposure to Bitcoin, “has settled into a new norm above 2x,” Harte wrote in a note to clients, citing sum-of-the-parts analysis.
“We also expect the company to benefit from Bitcoin catalysts in the coming year, particularly the Bitcoin halving event expected to take place this month,” he said. added, reiterating his Buy rating on the stock.
The highly anticipated Bitcoin halving event – which reduces the supply of new tokens – is expected at the end of April and has a history of increasing the price of the cryptocurrency. Bitcoin’s own rally of more than 50% to record highs this year underscored MicroStrategy’s tears given its strategy of raising capital to buy more digital assets.
Having the stock’s fate so closely tied to a cryptocurrency remains a risky bet, while the stock trades at a premium to Bitcoin, it is also hit harder on a decline.
Shares of MicroStrategy fell as much as 3.2% in intraday trading Friday, weighed down by a reversal in Bitcoin.
Read more: MicroStrategy’s plunge shows the risk of stocks as a Bitcoin proxy
Harte’s bullish and bearish scenarios for MicroStrategy further illustrate the perils: Shares could fall to $700 if the premium declines and regulatory pressures hit the cryptocurrency market and send Bitcoin back towards $48,000, he estimates. he. But the bull case — where Bitcoin rises above $90,000 and the premium on the company’s holdings rises — suggests a stock price of $2,700, a gain of nearly 70% from current trading.
For now, the April halving should be a positive catalyst for the stock and Bitcoin price.
“After the three previous halving events, the price of one BTC increased by 80x, 4x, and 6x over the next year,” Harte wrote. “As such, we believe investors view Bitcoin as a safe haven against inflation in the face of fiscal stimulus from central banks, and we expect continued adoption from institutional investors as Bitcoin serves as a disinflationary asset.”
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