Benchmark reiterates $570 Strategy target, says cash reserve strengthens bitcoin acquisition plan

Benchmark Equity Research reiterated its Buy rating and $570 price target on Strategy, saying the company's recent decision to build cash reserves rather than continue weekly bitcoin purchases reflects disciplined capital allocation rather than a shift in its long-term acquisition strategy.

Strategy shares (MSTR) closed down 2.1% at $91.67 on Friday, according to The Block's MSTR price page. Benchmark's $570 price target implies approximately 522% upside from that closing price.

The latest rating follows Strategy's filing with the U.S. Securities and Exchange Commission showing the company made no bitcoin purchases for a fifth consecutive week while increasing its U.S. dollar reserve to $3.75 billion. During the week ended July 26, Strategy also sold approximately 5.4 million MSTR shares, raising $544.5 million to strengthen its liquidity position.

Benchmark analyst Mark Palmer said that the larger reserve gives Strategy additional flexibility to fund preferred dividend obligations while preserving its ability to resume bitcoin purchases when market conditions become more attractive.

According to the analyst, the company has demonstrated that its recently introduced Digital Credit Capital Framework allows management to allocate capital between bitcoin acquisitions, reserve building and securities repurchases without departing from its long-term treasury strategy.

"The company has made clear that it remains a long-term buyer of bitcoin while strengthening its balance sheet," Palmer wrote in a note to clients on Monday.

Benchmark said concerns that the recent pause in bitcoin acquisitions signals a change in Strategy's core approach overlook management's stated objective of maintaining liquidity alongside continued expansion of its bitcoin holdings over time.

The brokerage also pointed to the company's repurchase of STRC preferred shares under its digital credit securities repurchase programme as evidence that the framework is operating as intended, allowing management to deploy capital across multiple parts of its capital structure.

Strategy currently holds 843,775 BTC acquired at an average purchase price of $75,476 per bitcoin, per the SEC filing. The treasury is valued at roughly $54 billion and represents more than 4% of bitcoin's maximum 21 million supply.

The company has not purchased bitcoin since acquiring 520 BTC on June 22, marking its longest buying pause since adopting its bitcoin treasury strategy. 

President and CEO Phong Le recently told Bloomberg Television that Strategy remains committed to accumulating bitcoin over the long term despite the recent emphasis on reserve building.