Analysts at Benchmark Equity Research are doubling down on Strategy (NASDAQ: MSTR), the largest corporate holder of Bitcoin (BTC). This comes after the company rolled out a five-part Digital
Analysts at Benchmark Equity Research are doubling down on Strategy (NASDAQ: MSTR), the largest corporate holder of Bitcoin (BTC).
This comes after the company rolled out a five-part Digital Credit Capital Framework. It broadens its ability to buy back securities, sell Bitcoin, and steer capital through periods of market stress.
Related: Analysts share stark warning for Strategy
Strategy announced a new framework on June 29. It sets up a $2.55 billion reserve covering about 17.4 months of dividends, a $1 billion common-stock buyback, a $1 billion preferred-share repurchase plan spanning its STRC, STRF, STRD, and STRK issues, and board approval to sell up to $1.25 billion in Bitcoin from an 847,363 BTC treasury.
According to TheBlock, Senior Equity Research Analyst Mark Palmer said the plan allows management to run Strategy's capital engine in "reverse" when markets demand it, including repurchasing shares, monetizing Bitcoin to cover obligations, and pausing issuance when stock trades below net asset value.
He described the firm as "an active manager of both sides of its capital structure."
Palmer explained that each component maps to a specific investor worry, from clearer capital-use parameters to higher preferred dividends and buybacks pitched as an answer to dilution complaints.
The shift, he added, moves Strategy from one-way issuance toward issuing when capital is cheap and buying back when its instruments trade at accretive levels.
Benchmark argued fears of aggressive Bitcoin liquidation ignore scale. Strategy sold just 32 Bitcoin in May, and against 847,363 BTC, the analyst called the $1.25 billion program a "rounding error."
The new plan comes after a roughly 12% weekly slide in MSTR stock and a drop in STRC, the variable-rate Stretch preferred, below $80.
Benchmark reiterated its "Buy" rating and $570 price target. The target sits roughly 515% above where the stock closed on June 29. On Monday, shares of the Bitcoin treasury company jumped 12.6% to $92.68, rallying after Strategy detailed the new framework.
At press time, MSTR traded about 4.35% lower near $88.65 in pre-market hours, while STRC fell 1.63% to roughly $82.31.
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