Over the next 6 years, MicroStrategy shares will need to reach $1336 to achieve average annual stock market performance of 9.0%. To achieve Upper quartile performance, MicroStrategy’s stock price will need to reach $1572 by 2029. At the current price of $796, what are market expectations regarding MicroStrategy’s future operating performance?
Executive Summary
- Price Target Research identifies MicroStrategy as having: high expected growth, high financial strength, high profitability, and low stability.
- Very high valuation, leading shareholder returns. Current valuation levels are very high relative to the MicroStrategy Peer Group. Recent market returns have significantly outperformed the MicroStrategy Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, MicroStrategy shares should reach a level of $631 by 2029 — an -3.8% per year total shareholder return. A 2029 stock price of $1336 would reflect median performance and a price of $1572 would be required to reach upper quartile performance.
- MicroStrategy’s past growth is modestly above average. Historical growth has been high relative to the MicroStrategy Peer Group and forecasted growth is relatively very high. Asset Growth, and Equity Growth have been superior. Revenue Growth, and EPS Growth have lagged. MicroStrategy’s historical income statement growth has been lower than balance sheet growth. Revenue growth has fallen short of asset growth; earnings growth has fallen short of equity growth driving erosion in return on equity.
- Return on Equity is group leading. Asset Turnover, Pretax Margin, and Pretax ROA are group lagging. The company has very low cash and will have to work to generate attractive investments and improve valuation.
- MicroStrategy’s risk profile is neutral. Overall variability has been only average with only average revenue variability, very high E.P.S. variability, and very high stock price volatility. Financial Strength is relatively very high and earnings’ expectations are below average. The debt/capital ratio has declined.
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