Bitcoin (BTC-USD) has been on an absolute tear, breaking through the $57,000 mark today. Investors appear to continue to pile into digital assets, leading to companies in related sectors also surging. Investors in MicroStrategy (NASDAQ:MSTR) are seeing this positive sentiment spill over, with MSTR stock up more than 10% in early afternoon trading today.
This move makes sense since MicroStrategy has been a long-term Bitcoin bull and has continued to acquire more Bitcoin throughout the bear market we saw last year. At these higher prices, the company’s balance sheet is ballooning in value, leading investors who want to play this rally diving into companies that may be trading at a discount relative to their existing holdings.
On this surge in Bitcoin prices, Canaccord Genuity has raised its price target on MSTR stock in a big way. This price target increase, from $617 to $975, is massive and implies more than 10% upside from current levels.
Let’s dive into what investors may want to make of today’s move and this recent price target increase.
MSTR Stock Surges on Key Analyst Upgrade
For MicroStrategy, a tech company that’s really transformed itself more into a holding company for Bitcoin, this surge to multi-year highs in Bitcoin prices sure is a big deal for investors. The company’s willingness to hold the line during previous declines and continue to acquire Bitcoin at lower prices has investors certainly viewing this company with plenty of optimism right now.
Expectations that increased demand for Bitcoin via spot exchange-traded funds (ETFs) could outpace existing supply has big money investors piling into digital assets in a fashion reminiscent of 2021. Analysts are also growing bullish on the space, with MicroStrategy’s business model focused on holding Bitcoin for the long-term being viewed with much more optimism than in months past. This price target upgrade from Canaccord is a big deal, and suggests sentiment may be favoring companies like MicroStrategy once again.
I continue to view MicroStrategy as a leveraged way for investors to play Bitcoin prices. For most, buying Bitcoin may be the better move, as investors are less exposed to cyclical business-related risks, as well as balance sheet and potential debt/related issues tied to the acquisition of the Bitcoin on MicroStrategy’s balance sheet.
For now, this rally appears to have legs. But I’d remain cautious and am happy to watch this surge from the sidelines right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
