Not that long ago, the idea of a company using its available cash to scoop up bitcoin (BTC) would have been treated with derision on Wall Street, but now the opposite is true.
Semler Scientific shares surged by 24% in Tuesday’s session after the company announced it has adopted bitcoin as its primary treasury reserve asset and has spent $40 million on a purchase of 581 BTC. The company’s chairman Eric Semler said that Bitcoin is “a reliable store of value and a compelling investment.”
Those are the sort of words that probably got a round of applause from the Street’s most prominent BTC advocate, MicroStrategy’s (NASDAQ:MSTR) Michael Saylor.
In fact, looking at Semler’s move, Canaccord’s Joseph Vafi, an analyst ranked amongst the top 3% of Street stock experts, finds various similarities between Semler Scientific and MicroStrategy.
“Both companies gained success in their core markets, which over time have matured. Both companies explored various traditional strategies to maximize shareholder value. Both companies while publicly traded also have founders/founder family members active in the business,” the 5-star analyst explained.
Additionally, while Semler only had a market cap of ~ $190 million when it announced its BTC purchase, Vafi reminds investors that MicroStrategy only had a market cap of ~$1.4 billion when Saylor set the company off on its bitcoin journey back in August 2020. Less than 4 years later, MicroStrategy boasts a market cap of $29 billion, with bitcoin largely responsible for the increase in valuation.
In the meantime, there’s also been a huge change in the way bitcoin is viewed on Wall Street. Vafi notes two recent developments. One being the FASB adopting a fair value accounting approach for bitcoin held on corporate balance sheets late last year. Before this change, bitcoin was classified as an intangible asset, similar to goodwill, which stipulated it could be written down only while also being omitted from tangible book value. Secondly, the approval of US spot ETFs has played a crucial role in initiating the transformation of bitcoin into an institutional asset class.
To this end, Vafi thinks there’s more upside for MSTR on the way. Along with reiterating a Buy rating, the analyst raised his price target from $1,590 to a Street-high of $2,047, implying the shares will gain another 26% in the months ahead. (To watch Vafi’s track record, click here)
Adding to the optimism, all three other recent analyst reviews on MSTR are bullish, resulting in a Strong Buy consensus rating for the stock. With an upside potential of ~11%, the stock’s average target price stands at $1,793. (See MSTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
