KBW Begins Coverage of Strategy with Outperform Rating, Highlights Bitcoin Exposure as Key Asset
KBW has initiated coverage of Strategy (formerly MicroStrategy), assigning it an outperform rating and a $560 price target, citing the company’s significant exposure to Bitcoin (BTC) as a primary factor driving its appeal.
In early trading, Strategy shares rose by 1%, reaching approximately $329. According to KBW analyst Bill Papanastasiou, Strategy stands to benefit greatly once it adopts the Financial Accounting Standards Board (FASB)‘s updated Bitcoin accounting guidelines in the first quarter of 2025. The change to fair value accounting would result in unrealized gains and losses being included in the company’s net income, improving its financial transparency and positioning.
In its Q4 2024 earnings, Strategy reported a $1 billion impairment loss due to its failure to implement the updated FASB standards.
KBW also noted that one of the major criteria for inclusion in the S&P 500 index is the generation of positive net earnings over the most recent quarter and the previous four quarters. As Strategy aligns with the new accounting rules, it could meet these criteria and potentially be added to the index.
With the largest Bitcoin treasury of any public company, Strategy is well-positioned to expand its Bitcoin holdings further. Additionally, Strategy could also benefit from earning yield through Bitcoin-based applications, unlocking even greater potential.
The report concluded by pointing out that the development of Bitcoin applications could unlock significant value for the company, given Bitcoin’s status as the most secure and decentralized blockchain in the world.
