Deutsche Bank Upgrades MicroStrategy (MSTR) to Buy

Deutsche Bank upgraded MicroStrategy (NASDAQ: MSTR) from Hold to Buy with a price target of $150.00 (from $130.00).

Analyst Karl Keirstead said, "Roughly 10 years ago, MSTR adopted a no-communication policy with the Street, meaning no earnings call, no guidance, no contact with investors, no response to Street inquiries and until six months ago, no stock bonuses to executives. This lack of visibility has been one of the biggest weights on MSTR’s industry-low multiple. At yesterday's annual shareholder meeting, however, we understand that MSTR management indicated a desire to open up to the Street and is now willing to meet with top shareholders. While MSTR is unlikely to offer guidance, we believe an earnings call is under consideration."

"MSTR shares trade at an EV/2014 revenue multiple of just 1.4x (and at a multiple of 2.7x ongoing maintenance revenues) despite having a best-in-class business intelligence (BI) suite (customer feedback is almost uniformly positive) and despite sporting a 22% license growth rate in 4Q13. While several factors weigh on the multiple (weak license growth over the last two years, the lack of a competitive product against Tableau in the “BI 2.0” space, margin deterioration), MSTR’s valuation multiple is heavily discounted (we estimate by at least 25%) to reflect the lack of visibility. In our view, this could close quickly if MSTR truly opens up," he added.

For an analyst ratings summary and ratings history on MicroStrategy click here. For more ratings news on MicroStrategy click here.

Shares of MicroStrategy closed at $107.21 yesterday.

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