Benchmark analysts increased their price target for MicroStrategy (NASDAQ:MSTR) to $650 from $450 while maintaining a Buy rating, citing the company’s innovative treasury operations and long-term value creation strategy.

MicroStrategy's share price has surged significantly, driven by optimism surrounding a potential shift in U.S. regulatory policies toward Bitcoin following the recent election. This rally has sparked debates about whether the stock’s valuation—currently trading at nearly three times the market value of the company’s Bitcoin holdings—is justified.

The analysts argued that critics undervalue the shareholder benefits generated by MicroStrategy’s treasury operations, which involve leveraging capital markets to continually increase its Bitcoin holdings. They likened the value creation from these treasury operations to traditional earnings generation in other companies, asserting that it should be factored into the company’s equity valuation. This approach incorporates the projected returns on Bitcoin holdings, or BTC Yield, as a metric analogous to earnings, which can then be contextualized using valuation multiples.

The revised $650 price target is based on a sum-of-the-parts analysis, which includes three key components: the projected value of MicroStrategy’s Bitcoin holdings by the end of 2026, a 15x multiple of the 2026 estimated BTC Yield, and the estimated value of its software business at year-end 2026.