As Bitcoin hovers around $58,700, Strategy (formerly MicroStrategy, ticker MSTR), the largest corporate Bitcoin holder, faces a reassessment by Wall Street. On July 30, investment bank TD Cowen slashed its price target on MSTR to $260 from $400, while maintaining a Buy rating and praising the company's newly unveiled Digital Credit Capital Framework.
Bitcoin Forecast Cut, But 200% Upside Remains
TD Cowen explicitly stated the target reduction stems from its revised macro outlook on Bitcoin, not concerns about Strategy's fundamentals. The bank lowered its Bitcoin price forecast to $100,000 by end-2026 (from $140,000) and to $135,000 by end-2027 (from $190,000). Despite the cut, the analyst reiterated a Buy rating, noting the new $260 target still implies over 200% upside from Monday's close of $92.68. The valuation is based on maintaining a 3x earnings multiple and unchanged Bitcoin holdings estimates.
Digital Credit Capital Framework Wins Praise
In contrast to the target cut, TD Cowen gave a strongly positive assessment of the Digital Credit Capital Framework announced earlier this week, calling it 'incrementally constructive.' The framework formalizes the company's existing financial flexibility, shifting from one-way issuance to active capital structure optimization. Key components:
Rebuilding Dollar Reserves: After issuing over 12 million shares of common stock (not used for Bitcoin purchases), dollar reserves have been fully rebuilt to $2.55 billion, covering more than 17 months of preferred dividends and interest expenses.
Preferred Dividend Rate Hike: The STRC preferred dividend rate was raised from 11.5% to 12% to stabilize the trading price around its $100 par value (recently trading 26% below par). TD Cowen views this as 'modestly positive.'
Dual Capital Allocation & Buybacks: Authorization for up to $1 billion in preferred stock buybacks and $1 billion in common stock buybacks, enabling arbitrage from price dislocations in the capital stack.
Bitcoin Monetization Plan: Formalized up to $1.25 billion in Bitcoin cash-out capacity, with proceeds dedicated to replenishing dollar reserves. The analyst stressed this is not a strategic shift but a codification of existing liquidity mechanisms.
TD Cowen believes the framework enhances credit transparency and capital flexibility during the crypto winter. Once the liquidity crunch passes, Strategy's value as a 'leveraged Bitcoin exposure vehicle' in traditional financial markets remains intact.