Barclays analyst Ramsey El-Assal has initiated coverage on MicroStrategy Inc (MSTR) with an Overweight rating and a price target of $146. El-Assal sees significant potential in MicroStrategy’s innovative approach to Bitcoin investment, combined with its strong software business.
El-Assal points to MicroStrategy’s unique ability to offer public company investors exposure to Bitcoin through its strategic Bitcoin holdings. The company has amassed a substantial Bitcoin pile worth around $13 billion, demonstrating a resilient capital deployment model that allows for continued Bitcoin accumulation. This strategy, according to El-Assal, protects MicroStrategy from potential liquidity shocks, often referred to as ‘crypto winters’.
Beyond its Bitcoin strategy, MicroStrategy boasts a strong software business with a growing market share in business intelligence (BI) and artificial intelligence (AI). The analyst highlights the company’s successful transition towards subscription services, which translates into higher margins and recurring revenue. Furthermore, the high retention rates of MicroStrategy’s software clients suggest a robust and sustainable business model.
El-Assal expects MicroStrategy’s partnerships with major hyperscalers to further solidify its market position and drive continued growth. He forecasts MicroStrategy’s revenue to reach $474 million in fiscal 2024, despite an expected EPS loss of $(1.58).
MicroStrategy’s approach to Bitcoin investment, coupled with its strong software business, positions the company as an attractive investment opportunity, according to El-Assal. He believes MicroStrategy is the ideal choice for investors seeking exposure to Bitcoin through a well-established and financially sound public company.
