TD Cowen slashes Strategy target to $260 on bitcoin outlook, calls new capital framework 'constructive'

TD Cowen cut its price target on Strategy to $260 from $400, a roughly 35% reduction, while maintaining its Buy rating and describing the company's newly unveiled Digital Credit Capital Framework as "incrementally constructive" for credit visibility and capital flexibility.

Analysts led by Lance Vitanza and Jonnathan Navarrete made it clear that the target cut stems from a revised bitcoin (BTC) price forecast rather than Strategy's framework announcement on Monday.

TD Cowen's price target implies more than 200% upside from Strategy's $92.68 closing price on Monday, a gap the analysts acknowledged "may seem out of context" given the size of the required move. TD Cowen also projects bitcoin will reach approximately $100,000 by the end of 2026, down from a prior estimate of roughly $140,000, and around $135,000 by the end of 2027, down from $190,000.

The bank left its projections for the number of bitcoins Strategy will acquire unchanged and kept its earnings multiple steady at 3x.

USD reserve rebuilt to $2.55 billion

Strategy's framework introduces a board-approved USD reserve policy, a revised STRC dividend approach, repurchase authorizations for both preferred shares and common stock, and a formal bitcoin monetization program, according to the note.

TD Cowen said the announcement largely codifies dynamics the firm had already modeled in a May 7 note, including preferred-led financing and the selective use of bitcoin sales to support dividend payments while maintaining net accumulation over time.

Strategy's USD reserve has been fully rebuilt to $2.55 billion, the analysts said, after the company issued more than 12 million shares of common stock over the past week while purchasing zero bitcoins.

TD Cowen called the move a step toward restoring investor confidence in the company's ability to weather an extended bitcoin downturn. The firm now targets a minimum reserve equal to at least 12 months of preferred dividends and interest expense, with current coverage exceeding 17 months, or roughly 26 months, including authorized bitcoin monetization capacity.

A shift toward two-way capital allocation

Strategy authorized up to $1 billion in preferred stock repurchases and $1 billion in MSTR share buybacks, a shift TD Cowen described as a move from one-way share issuance toward active capital structure optimization.

The analysts said this introduces a potential mechanism for the company to arbitrage pricing dislocations across its capital stack, though execution will depend on market conditions and management discipline.

The bitcoin monetization program caps potential sales at $1.25 billion, with proceeds earmarked for the USD reserve, according to the note.

TD Cowen said the program does not represent a strategic shift, since it had already assumed Strategy would make selective bitcoin sales to support dividends when appropriate. The framework instead formalizes that flexibility alongside equity issuance and preferred financing as an explicitly authorized and bounded capital tool.

STRC dividend hike aimed at stabilizing the discount

On STRC specifically, TD Cowen said the new 12% dividend rate, raised from 11.5%, reinforces that the security is being actively managed as an instrument to anchor its trading price near the $100 par value, rather than functioning purely as a funding vehicle.

The bank called the change a "modestly positive step" toward improving price stability and investor confidence in the preferred stock, which has traded as much as 26% below par in recent weeks amid bitcoin's price decline.