Bitcoin Treasury Firm Semler Scientific Still Has 3X Upside: Benchmark
Semler Scientific (SMLR) presents a compelling investment opportunity due to a significant valuation disconnect. Currently trading slightly above the market value of its Bitcoin holdings, its market net asset value (mNAV) stands at 1.04. Analyst Mark Palmer of Benchmark highlights this discrepancy, arguing that the market undervalues Semler’s potential for strategic leverage in expanding its Bitcoin holdings.
Palmer maintains a buy rating and a $101 price target, representing nearly triple the current share price of $35. He emphasizes the significant “upside optionality” not reflected in the stock’s valuation. Unlike other companies with Bitcoin treasuries that rely heavily on equity issuance, Semler adopts a “slow money” approach.
This strategy, outlined by newly appointed Director of Bitcoin Strategy Joe Burnett, involves a balanced approach to scaling Bitcoin holdings. It utilizes operating cash flow, low-cost convertible debt, and selective at-the-money (ATM) issuances. This approach prioritizes preserving shareholder value and minimizing dilution.
Semler holds $100 million in 4.25% convertible notes maturing in 2030 and possesses substantial capacity to issue long-term, Bitcoin-backed debt. This further amplifies potential equity upside. As of July 31st, Semler held 5,021 Bitcoin, representing a cost basis of $475.8 million and a market value of $586.2 million. This translates to an unrealized gain of $110.4 million and a 31.3% year-to-date Bitcoin yield.
Management projects reaching 10,000 Bitcoin by the end of 2025, with longer-term goals of 42,000 Bitcoin by 2026 and 105,000 by 2027. Benchmark’s $101 price target is derived from a sum-of-the-parts analysis. This considers the projected future value of Semler’s Bitcoin treasury alongside its healthcare operations, including the promising CardioVanta unit.
The stock’s current price, near its Bitcoin NAV, indicates a minimal premium for strategic flexibility. Benchmark anticipates this gap closing as Semler executes its capital strategy. Semler’s recent $25 million Bitcoin purchase solidified its position as the 14th largest publicly held Bitcoin treasury. This strategic acquisition, combined with its conservative financial approach and ambitious Bitcoin accumulation plan, positions Semler for substantial future growth.
