TD Cowen Slashes Strategy Price Target to $440 Amid Bitcoin Yield Concerns - What Investors Need to Know

Investment Bank Adjusts Outlook on Strategy (Formerly MicroStrategy)

Analysts at investment bank TD Cowen have revised their one-year price target for bitcoin treasury company Strategy (formerly MicroStrategy) downward to $440 from $500. This adjustment reflects a weaker outlook for bitcoin yield, attributed to dilution from continued equity and preferred stock issuance.

Revised Bitcoin Acquisition Forecast

Led by managing director Lance Vitanza, the analysts now project that Strategy will acquire approximately 155,000 bitcoins in fiscal year 2026, a significant increase from the prior estimate of 90,000. However, this accelerated accumulation is expected to be funded through a greater mix of common and preferred equity, which the analysts warn will dilute bitcoin yield—defined as the percentage change in bitcoin held per fully diluted share.

Yield Projections and Financial Impact

For FY26E, the analysts now model a 7.1% bitcoin yield, down from their previous estimate of 8.8% and a substantial drop from 22.8% for FY25A. This translates to a BTC $ Gain of $6.315 billion for FY26E, compared to $9.4 billion previously. The $440 price target is based on an unchanged 5x multiple.

Future Reversal Expected

The analysts anticipate a reversal in fiscal 2027, with bitcoin yield accelerating to 8.1% (versus 6.6% prior) and BTC $ Gain rising to over $13.5 billion (versus $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.

Aggressive Strategy Amid Bitcoin Pullback

Strategy has aggressively leaned into the recent pullback in bitcoin prices, rather than slowing its treasury activity. In 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 proceeds were used to purchase an additional 13,627 bitcoins.

Rationale Behind the Move

The analysts noted that Strategy could have slowed its pace given the near-zero bitcoin premium, but instead chose to take advantage of what many believe is a temporary depression in bitcoin prices. Because the latest purchases were funded largely through equity issued close to parity, the transactions generated scant bitcoin yield. This move only makes sense if bitcoin prices recover meaningfully—a scenario the analysts deem likely due to increasingly favorable macro and regulatory factors.

Long-Term Outlook and Price Targets

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

Constructive View Despite Target Cut

Despite the lower yield outlook and price target reduction, the analysts maintain a constructive view on Strategy as a vehicle for bitcoin exposure. 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. For example, the senior STRF preferred shares imply a potential internal rate of return of around 30% based on yield compression and fixed dividends.

Index Inclusion Developments

The analysts also addressed recent developments around index inclusion, noting that MSCI earlier this month decided not to proceed, for now, with excluding bitcoin treasury companies like Strategy from its indexes. This is viewed as a positive near-term development, though longer-term uncertainty remains. The analysts expressed concern that large customers like BlackRock, which benefit from selling spot bitcoin ETPs, might view public bitcoin treasury companies as competitors, potentially influencing future decisions.

Disclaimer

This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.