Analysts are bullish on software company MicroStrategy (MSTR) ahead of its second quarter earnings report on Tuesday, with TD Cowen analyst Lance Vitanza praising the company for its hybrid corporate strategy of converting all of its earnings from its core software intelligence business into bitcoin. Berenberg analyst Mark Palmer also raised his price target to $510 from $412.30 on July 12, citing the faster-than-expected pace at which MicroStrategy has acquired bitcoins.
This is not a short-term trading strategy but rather reflects a belief that ultimately, bitcoin will prove a superior store of value relative to metals and fiat currencies, Vitanza wrote in a note to investors. TD Cowen’s price target for MSTR is $520 for year’s end, while MicroStrategy is currently trading at around $435, up 207% so far this year.
As of July 28, the company owned an estimated 152,333 bitcoins worth roughly $4.5 billion, having most recently acquired 12,333 bitcoin for $347 million in cash between April 29 and June 27. Bitcoin is currently trading at $29,293, up about 77% year-to-date, according to market data. With bitcoin’s big rally this year, MicroStrategy’s impairment loss on its digital assets narrowed to $18.9 million in the first quarter, down from the fourth quarter’s impairment loss of $197.6 million.
For the upcoming earnings report on Tuesday, TD Cowen estimates revenue to be $127.9 million, which would be a 5% increase from the first quarter. We see MicroStrategy as an attractive vehicle for investors looking to gain bitcoin exposure, Vitanza said.