MicroStrategy Inc (NASDAQ: MSTR) has already delivered close to 7x returns in the trailing 12 months – but a KBW analyst is convinced it has still significant room to the upside in 2025.
Bill Papanastasiou assumed coverage of MSTR with an “outperform” rating on Friday.
His $560 price target indicates potential for another 75% upside on its previous close.
The bullish call arrived only a day after the company changed its name to “Strategy” and incorporated Bitcoin into its logo to reflect its focus on the world’s largest cryptocurrency.
Once a business intelligence firm, the Nasdaq-listed firm has now shifted its focus to becoming the world’s largest corporate holder of Bitcoin.
Strategy records best-ever Bitcoin yield
Earlier this week, Strategy recorded a Bitcoin yield of 74.3% for 2024 – well above its previous record of 47.3% in 2021.
Additionally, the company based out of Virginia raised its BTC yield target from up to 8% to 15% each for the next three years.
According to Bill Papanastasiou:
Strategy is an attractive proxy for levered Bitcoin exposure with additional torque from accretive Bitcoin purchases that are fueled by highly demanded security issuances and a valuation that exceeds net asset value.
Note that MicroStrategy stock is currently down about 30% versus its high in November.
MicroStrategy could soon be included in the S&P 500
KBW is bullish on Strategy also because it could make its way into the benchmark S&P 500 index this year after the Financial Accounting Standards Board (FASB) announced a rule change last year.
The rule change enables businesses to include crypto-related unrealized gains in their net income number.
What it could mean for MSTR is a one-time boost of about $12.75 billion (adjusted) to its retained earnings, according to Bernstein analysts.
They like MicroStrategy stock also because it could take advantage of the “opportunity to generate yield on-chain from the development of applications built on top of the Bitcoin network.”
Strategy shares do not, however, pay a dividend at the time of writing.
How did MSTR do in Q4?
In its fiscal fourth quarter, Strategy lost just over $3.0 on a per-share basis as revenue declined about 3% on a year-over-year basis to $120.7 million.
Analysts, in comparison, were at 9 cents a share loss on $122.4 million in revenue.
MSTR saw strength in product licenses in its recently reported quarter. Revenue from that segment was up 18.3% in Q4.
It was, however, more than offset by a massive 48% decline in subscription services revenue.
MicroStrategy bought another 218,887 Bitcoin in its fourth financial quarter and raised $584 million from its STRK convertible preferred offering.
Strategy stock is currently going for $337 versus $15 only in late 2022.
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