TD Cowen cuts Strategy price target to $440, cites lower bitcoin yield outlook

Analysts at investment bank TD Cowen have cut their one-year price target on bitcoin treasury company Strategy (formerly MicroStrategy) to $440 from $500, citing a weaker outlook for bitcoin yield as dilution from continued equity and preferred stock issuance increases.

The analysts, led by managing director Lance Vitanza, now expect Strategy to acquire around 155,000 bitcoins in fiscal year 2026, up from a prior estimate of 90,000, they said in a Wednesday report. However, the higher pace of accumulation is expected to be funded with a greater mix of common and preferred equity, which the analysts said will dilute bitcoin yield — defined as the percentage change in bitcoin held per fully diluted share.

“For FY26E, we now model 7.1% BTC Yield (vs. our 8.8% prior estimate and down from 22.8% for FY25A),” the analysts wrote. “This translates to a BTC $ Gain of $6.315 billion for FY26E (vs. $9.4 billion prior) and a price target of $440 based on an unchanged 5x multiple.”

The analysts expect a reversal in fiscal 2027, with bitcoin yield accelerating to 8.1% (vs. 6.6% prior) and BTC $ Gain rising to more than $13.5 billion (vs. $10.150 billion prior). BTC $ Gain is defined as the U.S. dollar value of bitcoins acquired without increasing the company’s fully diluted share count, calculated as BTC Gain multiplied by the average bitcoin price over the period.

The analysts said Strategy has leaned aggressively into the recent pullback in bitcoin prices rather than slowing its treasury activity. Over the week ended Jan. 11, the company issued about 6.8 million shares of common stock and roughly 1.2 million shares of its variable-rate STRC preferred stock, raising approximately $1.25 billion in total. Nearly all of the proceeds were used to purchase an additional 13,627 bitcoins.

“Having flirted over the past few weeks with a zero bitcoin premium, Strategy could not have been faulted had it chosen to slow the pace of its treasury operations,” the analysts wrote. “We had expected as much, but Strategy is having none of that. The company has moved aggressively to take advantage of what we and many others believe will prove a temporary depression in the price of bitcoin.”

Because the latest purchases were funded largely through equity issued close to parity, the transactions generated scant bitcoin yield, the analysts said. The move, they added, only makes sense if bitcoin prices recover meaningfully — a scenario the analysts believe is likely given what they described as increasingly favorable macro and regulatory factors.

Looking ahead, the analysts expect Strategy to remain aggressive in issuing equity and preferred securities as long as bitcoin prices remain depressed. They continue to model bitcoin reaching around $177,000 by December 2026 and approximately $226,000 by December 2027, with a reversal in yield dynamics expected in fiscal 2027 as higher prices improve the accretion profile of future purchases.

Despite the lower yield outlook and price target cut, the analysts maintained a constructive view on Strategy as a vehicle for bitcoin exposure. They said they see opportunities across the company’s capital structure, including all five tranches of preferred stock, which they believe can offer a combination of income generation and capital appreciation. As one example, the analysts highlighted the senior STRF preferred shares, which they said imply a potential internal rate of return of around 30% based on yield compression and fixed dividends.

The analysts also addressed recent developments around index inclusion, noting that MSCI earlier this month said it would not proceed, for now, with excluding bitcoin treasury companies like Strategy from its indexes. The analysts described the decision as a positive near-term development, while cautioning that longer-term uncertainty remains.

"We note that many of MSCI's largest customers are making significant sums selling spot bitcoin ETPs — in the case of Blackrock (MSCI's largest customer at 10.2% of FY24 revenue), bitcoin products constitute the company's largest revenue source," the analysts wrote. "We worry that the BlackRocks of the world mistakenly view public bitcoin treasury companies like Strategy as competitors and thus 'bad for business'. While such a belief would in our opinion be misplaced, it would be hard for MSCI to resist entreaties from its customer base."