Analysts have reaffirmed MicroStrategy's “buy” rating and raised the stock's price target to $1,800, meaning the stock may still have room to rise by 10%.
BTIG analyst Andrew Harte said,$MicroStrategy (MSTR.US)$The stock price has risen by nearly 130% so far this year, which is driven by the higher price of Bitcoin. Analysts say there is room for MicroStrategy shares to rise further as Bitcoin soars. Analysts have reiterated their “buy” rating for the stock and raised the stock's price target to $1,800, which means the stock may still have room to rise by 10%. The average price target given by the four analysts followed by the media was $1999.99, which is in line with the stock's intraday record high in March.
As of March 18, MicroStrategy held more than 214,000 bitcoins. Analysts said in a report that the premium investors are willing to pay for the company's Bitcoin exposure “has reached a new normal of more than 2 times.” “We expect the company to benefit from Bitcoin as a catalyst in the coming year, particularly the Bitcoin halving event that is expected to occur this month,” the analyst said. The much-publicized Bitcoin halving event means that the supply of Bitcoin will decrease, and previous halving events have all boosted the price of Bitcoin.
Analysts said that for now, a possible Bitcoin halving event in April should be a positive catalyst for Bitcoin itself and MicroStrategy's stock price. “After the first three halving events, the price of Bitcoin increased 80 times, 4 times, and 6 times, respectively, over the next year,” he said. “As a result, we believe investors will see Bitcoin as a safe haven to avoid inflation, and that institutional investors will continue to accept Bitcoin.”
Bitcoin has risen more than 50% this year. While this has boosted MicroStrategy's stock price higher, it has also hampered the company's strategy to raise capital to buy more digital assets. Also, it is still very risky for the stock to be so closely linked to a cryptocurrency. The stock has gained more than Bitcoin since this year, but once Bitcoin falls, the stock has been hit even harder.
Analysts further explain the risks to MicroStrategy's upside and downside scenarios. He estimates that if the premium shrinks and regulatory pressure hits the cryptocurrency market, Bitcoin may fall back to the level of $48,000, and the stock price will also fall to $700. However, the analyst added that under the bull market scenario, Bitcoin is expected to soar above $90,000, and the stock price will also rise to $2,700.
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