Investment bank Citi (C) initiated coverage of the strategy (MSTR) with a Buy/High Risk rating and a $485 price target, positioning the stock as a leveraged bet on Bitcoin. .
MSTR shares were up 1.5% in early trading Tuesday, around $301.
The price target reflects Citi’s 12-month Bitcoin forecast of $181,000, representing a 63% upside from current levels, and a 25% to 35% premium to net asset value (NAV), which matches the strategy’s historical bitcoin return multiple of 2.5x to 3.5x, the bank said in Tuesday’s report.
According to the bank’s analysts, this structure makes the stock an amplified play on Bitcoin’s performance, with outsized upside potential in bull markets and sharp declines if prices reverse.
In Citi’s bearish scenario, with bitcoin falling 25% and the NAV premium falling from 35% to a 10% discount, the stock could lose about 61%.
The bank credits the company’s pivot to bitcoin in 2020, led by executive chairman Michael Saylor, as a model for digital asset treasury strategy.
The strategy is expected to continue to issue convertible debt, preferred shares and equities, based on the NAV premium, to expand its bitcoin position, the report said.
The report notes that the company’s Bitcoin yield, the year-to-date increase in BTC per fully diluted share, was a key driver of the NAV premium.
Strategy said it purchased an additional 168 BTC at an average price of $112,051, bringing total holdings to 640,418 BTC, in a filing on Monday.
Learn more: Strategy Expands Bitcoin Holdings to 640,418 BTC With Latest Purchase
