Is Strategy Inc.’s (MSTR) Bitcoin Reliance a Blessing or a Risk? TD Cowen Stays Bullish

Strategy Inc. (NASDAQ:MSTR) is one of the best stocks to buy according to Citadel LLC. On October 31, TD Cowen analyst Lance Vitanza reaffirmed his Buy rating on the stock but lowered his price target to $535 from $620 previously, following the company’s Q3 results, according to TheFly. While the target was cut, the analyst said that the new credit rating by S&P could expand its investor base and help increase the reach of funding. As was visible in earlier cycles, he also anticipates a rebound in bitcoin-related premiums and capital issuance by 2026.

Before this update, Vitanza had reaffirmed his Buy rating on the stock on October 27 with an unchanged price target of $620, citing the increasing institutional adoption of bitcoin as the primary driver of his positive stance.

Vitanza cited JPMorgan’s acceptance of bitcoin as collateral for certain financing activities to emphasize the structural tailwinds from the institutional and broader financial systems’ adoption of digital assets. This, in his view, supports the investment case for established players and investors in the space, including Strategy Inc. (NASDAQ:MSTR). With a disciplined capital strategy, the company’s bitcoin holdings grow faster than equity issuance, enabling it to increase bitcoin ownership per share and, in turn, increase shareholder value.

Is Strategy Inc.’s (MSTR) Bitcoin Reliance a Blessing or a Risk? TD Cowen Stays Bullish

According to an October 28 report from Bloomberg, S&P Global Ratings cited the company’s heavy reliance on cryptocurrency as one of the major reasons for assigning it a B- credit rating, a junk or non-investment-grade rating. Moreover, the rating company also flagged limited business diversification and low liquidity as key credit risks.

Separately, while Strategy Inc. (NASDAQ:MSTR) is sometimes seen as a proxy for bitcoin, YTD performance has diverged, with the stock down around 2% and bitcoin up nearly 19%. Investors should also note that Strategy carries high volatility with an equity beta of 3.8.

Strategy Inc. (NASDAQ:MSTR) is a technology company that calls itself the world’s first and largest Bitcoin Treasury Company. The company has substantial Bitcoin holdings, which form a core part of its corporate strategy. Additionally, its software platform provides enterprise analytics and data visualization solutions.

While we acknowledge the risk and potential of MSTR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MSTR and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.