Strategy (MSTR), the company formerly known as MicroStrategy, is an appealing investment for equity investors looking for levered bitcoin (BTC) exposure, investment bank KBW said in a research report Thursday.

KBW assumed coverage of Strategy with an outperform rating and a $560 price target. The shares were 1% higher at around $329 in early trading.

Once Strategy, the company co-founded by Michael Saylor, adopts the Financial Accounting Standards Board (FASB) updated accounting treatment for bitcoin holdings in the first quarter of this year, it will shift from an “outdated measurement approach to fair value accounting, with unrealized gains/losses flowing to net income,” analyst Bill Papanastasiou wrote.

The company reported an impairment loss of $1 billion for the fourth quarter of 2024 because it did not adopt new FASB rules.

One of the most important criteria for joining the S&P 500 index is positive net earnings in the last quarter and the sum of the previous four quarters, the report said.

Strategy has the “largest bitcoin treasury held by a public operating company,” , and the company has a number of tools it could use to expand its BTC stack, KBW said.

In the longer term, there is also the opportunity for Strategy to generate yield on-chain from applications built on the Bitcoin network, the bank said.

The development of applications on top of the Bitcoin network could result in a massive value unlock, as it is the most secure, decentralized and valuable public blockchain, the report added.

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