MicroStrategy: Canaccord Lowers Price Target To $780

MicroStrategy (NASDAQ: MSTR) reported its second quarter financial results on July 29. The company reported revenue grew 13.4% year over year to $125.4 million, while gross profit grew 18.2% to $102.3 million for the quarter. The company’s operating profit came in at -$414 million while net income was -$299 million. GAAP earnings per share were -$30.71, primarily due to a $689.6 million write-down on their 0.105 million bitcoins.

MicroStrategy only has 5 analysts covering the stock, but it looks like most increased their 12-month price target after the earnings. The firms new 12-month average price target is $682.50, up from the $667.50 last month. BTIG has the street high target at $950 while the lowest sits at $360. Out of the 5 analysts, 3 have strong buys, 1 analyst has a hold rating and another analyst has a strong sell on the company.

Canaccord Genuity lowered their 12-month price target on MicroStrategy to $780 from $920 and reiterated their buy rating on the company following the results. They say that the core business is showing “modest but steady acceleration,” while Bitcoin’s price has been able to stave off price drops. Canaccord says MicroStrategy’s ~$28k bitcoin average, “provides downside balance sheet protection, and the Bitcoin market is liquid enough for the company to manage its risk,” and that the company remains one of the only ways equity investors can get exposure to Bitcoin.

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Canaccord derives much of their price target from the company’s Bitcoin holdings, which they say, “we are encouraged to see MSTR continue to use its significant BTC balance sheet holdings to further drive its hodling strategy,” and they remain bullish on Bitcoin in the medium to long term. For the core business, they believe that MicroStrategy, “has done an impressive job in updating its product portfolio with an emphasis on cloud and digital transformation,” and point to the increased R&D costs to good things coming in the future.

Canaccord calls’ the second quarter results “stronger than expected,” as MicroStrategy was driven by customer growth and an increase of the OEM business. Subscription services grew 29% year over year, while product licenses revenue grew 50% year over year. Subscription billing also grew at 29% year over year.

Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.