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Citi Initiates MicroStrategy At Buy, $230 Price Target

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Citi’s Walter H Pritchard believes that MicroStrategy Incorporated (NASDAQ: MSTR) offers the best means to invest in the trend toward “democratization of little data,” which puts “the power of data analytics in the hands of a broadening population of business users.”

The analyst initiated coverage of the company with a Buy rating and price target of $230.

Margin Improvement

Pritchard mentioned that MicroStrategy’s management has “re-engaged with The Street and prioritized medium-term value creation, driving margin improvement.”

The analyst believes that there could be additional catalysts that could drive more stable quarter on quarter results, along with the potential for management to provide guidance and capital returns through share buybacks.

Related Link: MicroStrategy A Big Winner Following Its Earnings Release

This would add downside support to the stock, in the event that the quarterly volatility impacts the shares.

Improved Sales Productivity

"We believe management’s focus on execution, changes in the organization, as well as internal systems have the potential to drive further improvement to sales productivity, which peaked in 2010,” Pritchard stated.

The analyst expects productivity at the FY15 levels going forward. However, if MicroStrategy is able to return to the 2010 levels, there could be 11–12 percent upside to the consensus expectations for 2016–17.

According to the Citi report, the company’s “execution in Europe is improving, a geography where MSTR has seen significant sales turnover and uneven execution.”

At the same time, Pritchard cautioned that MicroStrategy’s reliance on large deals could lead to some quarterly volatility.

Latest Ratings for MSTR

DateFirmActionFromTo
Feb 2019Initiates Coverage OnBuy
Sep 2017MaintainsNeutral
Jul 2017DowngradesBuyHold

View More Analyst Ratings for MSTR
View the Latest Analyst Ratings

Posted-In: Citi Walter H PritchardAnalyst Color Long Ideas Initiation Analyst Ratings Tech Trading Ideas

 

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