Cantor cuts the strategy’s price target by 59% and remains ‘long-term bullish’ on Bitcoin Giant

Cantor Fitzgerald analysts significantly lowered their price target Strategy shares in a note Friday, while reiterating an “Overweight” rating for the Bitcoinpurchasing company that owns approximately $58 billion in BTC.

The investment bank had set a price target of $229 for Strategy shares for the next 12 months, about 59% lower than its previous estimate of $560. Still, Cantor underlines his positive outlook for the company, which has seen its shares fall more than 50% in the past six months.

The adjustment reflects a decline in the value analysts apply to Strategy’s treasury business, which fell from $364 per share to $74 per share. The analysts now expect Strategy to raise $7.8 billion from the capital markets in the coming year, down from $22.5 billion.

The analysts noted that some market participants fear that “crypto winter has arrived” – another way of describing a prolonged market downturn, with prices falling and investor interest cooling. At the same time, they called a certain form of ‘fear-mongering’ regarding Strategy exaggerated.

Strategy shares fell to $178 on Friday Yahoo Financethus erasing the week’s gains. The price of Bitcoin, meanwhile, fell below $90,000. Bitcoin has fallen nearly 30% since hitting a new high above $126,000 in early October.

The analysts said they have “very little reason to believe” that Strategy would ever be forced to sell its Bitcoin, even as its reliance on issuing preferred stock to buy Bitcoin has grown. These preferred shares offer dividend payments, but are not guaranteed.

On Monday Strategy established a “cash reserve” of $1.44 billion to effectively cover dividend payments for nearly two years. The analysts highlighted that none of Strategy’s convertible debt, which totals $8.2 billion, matures until 2028.

Furthermore, Strategy’s Bitcoin buying activity is unlikely to stop purely because Bitcoin’s price has fallen recently, the analysts said. However, Bitcoin’s largest corporate holder has acknowledged the possibility of selling it under certain conditions.

If there is one fear that is “somewhat justified”, it would be the removal of Strategy from the MSCI indices, the analysts said. Last month JPMorgan said posited that the removal of Strategy from the products of global financial companies could lead to an outflow of $2.8 billion.

Strategy has historically increased its Bitcoin supply by issuing common stock. However, this move has become a less effective way for the company to increase the amount of Bitcoin it owns per share as its market capitalization has fallen below the value of its crypto holdings.

The analysts emphasized that the dynamics, reflected by a decline in Strategy’s so-called mNAV, have been cyclical. That includes both 2022 lows and last year’s highs.

This week, several institutions offered updated price targets for Strategy’s shares as shares hover near their 13-month lows. Although TD Cowen became bearishBenchmark remained bullish.