Strategy stock rating reiterated at Sell by Monness, Crespi, Hardt

Investing.com - Monness, Crespi, Hardt has reiterated its Sell rating on Strategy (NASDAQ:MSTR) with a price target of $175.00, maintaining its bearish outlook on the bitcoin-holding company. Currently trading at $327.79, the stock sits well above the firm’s target but below the analyst high target of $705. According to InvestingPro analysis, MSTR has delivered an impressive 143% return over the past year, though current valuations suggest the stock is slightly overvalued.

The research firm noted that Strategy recently purchased 525 bitcoins, bringing its total holdings to 638,985 bitcoins with an average cost of approximately $73,900 per bitcoin. Last week’s capital raise marked the first in several weeks that did not include issuance of MSTR common stock, with funding instead coming from STRF, STRK, and STRD instruments totaling $68.2 million. InvestingPro data shows the company maintains a solid financial health score of 2.51 (rated as "GOOD"), despite its aggressive bitcoin acquisition strategy.

Monness, Crespi, Hardt highlighted that Strategy’s premium to its bitcoin holdings (HODL) remains at approximately 1.3 times compared to a median of 1.2 times, which the firm considers "not compelling enough to warrant adding to a short position."

The research firm identified several factors that could lead to Strategy’s premium unwinding, including declining implied volatility limiting the convertible debt portion of the company’s 42/42 Plan, limited uptake for alternative issuances, growing dilution to pay interest, and the lack of investment-grade debt market access. InvestingPro analysis reveals that short-term obligations exceed liquid assets, with a current ratio of 0.68, adding weight to these concerns. Subscribers can access 8 additional ProTips and comprehensive financial metrics in the Pro Research Report, providing deeper insights into MSTR’s risk factors and growth potential.

Strategy’s recent capital raising activities have shown a pattern of approximately 90% common-financed raises entering the week of September 15, as the company continues to implement its bitcoin acquisition strategy while facing what the research firm describes as a growing pool of copycat strategies.

In other recent news, Strategy Inc reported significant financial activities, including the sale of shares through its at-the-market offering programs. The company generated net proceeds of $217.3 million from selling various preferred and common stock shares. Additionally, Strategy Inc acquired more bitcoin holdings during the specified period. In terms of analyst ratings, Benchmark has maintained its Buy rating for Strategy Inc, setting a price target of $705.00. This assessment is based on the projected value of the company’s bitcoin holdings and software business by the end of 2026. Furthermore, Strategy Inc announced an update to its dividend adjustment framework for its Variable Rate Series A Perpetual Stretch Preferred Stock, which could affect future dividend rates based on the stock’s volume-weighted average price. Despite being excluded from the S&P 500 index additions, Strategy Inc continues to receive positive analyst evaluations. The company remains active in managing its financial strategies and investment portfolio.

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