TD Cowen Cuts Strategy Price Target to $440, Citing Lower Bitcoin Yield Outlook

TD Cowen has reduced its one-year price target for Strategy to $440 from $500, citing a weaker outlook for bitcoin yield. The move reflects concerns over how the company is funding its bitcoin purchases, which could reduce the return per share for investors according to analysis.

Analysts, led by Lance Vitanza, now anticipate Strategy will acquire around 155,000 bitcoins in fiscal year 2026, up from a prior forecast of 90,000. The increased acquisition pace is expected to be funded with a greater proportion of common and preferred equity, which dilutes the bitcoin yield per fully diluted share.

Despite the reduced price target, TD Cowen maintains a constructive view of Strategy as a vehicle for bitcoin exposure. The firm believes the company offers a unique way to gain exposure to bitcoin, particularly through its capital structure, including preferred stock tranches.

Why Did This Happen?

The firm’s updated analysis is based on the expectation that bitcoin yield will fall to 7.1% in fiscal year 2026, down from a prior estimate of 8.8%. This represents a significant decline from the 22.8% yield recorded in fiscal year 2025. The analysts note that the lower yield translates into a reduced dollar gain from bitcoin acquisitions.

The firm also pointed to the recent equity issuance by Strategy, which included about 6.8 million shares of common stock and 1.2 million shares of preferred stock, raising $1.25 billion. Nearly all of the proceeds were used to purchase an additional 13,627 bitcoins. However, because these purchases were funded largely through equity issued close to parity, they generated little bitcoin yield.

What Are Analysts Watching Next?

TD Cowen sees potential for a reversal in fiscal year 2027, with bitcoin yield expected to rise to 8.1% and the dollar gain from bitcoin acquisitions reaching more than $13.5 billion. This would represent an improvement over the firm’s previous forecast of $10.15 billion in dollar gains.

The firm also expects Strategy to remain aggressive in issuing equity and preferred securities as long as bitcoin prices remain depressed. TD Cowen continues to model bitcoin reaching around $177,000 by December 2026 and approximately $226,000 by December 2027.

Analysts also highlighted the potential for a reversal in yield dynamics in fiscal 2027, as higher bitcoin prices are expected to improve the accretion profile of future purchases. The firm sees this as a key factor in determining the long-term value proposition of Strategy for investors.

Strategy has also been proactive in navigating the recent pullback in bitcoin prices. Over the week ending January 11, the company issued a significant amount of equity to fund additional bitcoin purchases. The analysts note that Strategy’s aggressive approach aligns with their view that the recent price correction is temporary.

The firm also addressed the recent MSCI decision not to exclude bitcoin treasury companies like Strategy from its indexes. While the analysts see this as a positive near-term development, they caution that long-term uncertainty remains. They also expressed concern that major financial institutions like Blackrock might view companies like Strategy as competitors, potentially influencing index inclusion decisions.