Rating and Price Target: $570 Implies 515% Upside
According to The Block, Benchmark Equity Research analyst Mark Palmer reiterated a Buy rating on Strategy (formerly MicroStrategy) with a $570 price target. The target represents about 515% upside from Monday's closing price of $92.68. The price target is based on the company's Bitcoin holdings and the new capital management framework. Palmer stated that the target does not yet fully account for the potential positive impact of the Digital Credit Capital Framework.
Strategy currently holds approximately 847,000 BTC, valued at around $54 billion at current market prices, while the company's total market capitalization is only about $20 billion, implying a significant discount. Benchmark believes the discount will continue to narrow as the new framework is implemented, driving the stock toward the target price.
Digital Credit Capital Framework: From One-Way Issuance to Active Two-Way Management
Palmer noted that Strategy's Digital Credit Capital Framework enables the company to actively manage both sides of its capital structure based on market conditions. Specifically, the framework allows Strategy to repurchase common and preferred shares when needed, sell Bitcoin to fulfill obligations, and pause equity raises when the stock is not trading at a premium. This marks a shift from the company's previous strategy of one-way security issuance (raising capital via convertible bonds or equity to buy Bitcoin) to proactive two-way capital management.
Palmer described this change as a major positive for shareholders. Previously, a key concern was that the company's continuous security issuance diluted existing shareholders without a clear exit mechanism. The new framework addresses dilution fears through structured buyback programs and enhances flexibility. For example, the company can buy back shares when the stock trades below net asset value, or sell part of its Bitcoin holdings when the price is high.
Authorized BTC Sales: $1.25 Billion Is Only 2% of Treasury
The report specifically highlighted that the authorization to sell up to $1.25 billion in Bitcoin is insignificant relative to Strategy's approximately 847,000 BTC reserve. At a Bitcoin price of around $65,000, $1.25 billion equates to roughly 19,000 BTC, or just 2.2% of total holdings. Thus, the authorization is more of a risk management and liquidity tool rather than a signal of large-scale selling. Palmer argued that investors should not overinterpret this provision.
Overall, Benchmark maintains a positive stance on Strategy, viewing the Digital Credit Capital Framework as a key step in corporate governance upgrade that could drive value realization for the stock.