Bank of America has upgraded its rating on Coinbase shares from underperform to neutral and increased its price target for the cryptocurrency exchange to $217. This upgrade reflects a positive outlook for Coinbase and has caused the COIN price to rise by 2.5% in the pre-market and 4.23% for the day.
Bank of America’s decision to upgrade Coinbase is based on several factors. Analysts have cited the favorable macro backdrop that has supported the cryptocurrency markets and increased trading volumes. They have also highlighted Coinbase’s commitment to expense discipline and diversification as factors that could contribute to improved earnings. However, Bank of America analysts have acknowledged potential risks that could limit the stock’s upside. One concern is Coinbase’s reliance on transaction revenue for profitability, which could pose challenges if market conditions change. Additionally, the ongoing lawsuit between Coinbase and the U.S. Securities and Exchange Commission (SEC) creates regulatory uncertainty that could impact the company’s operations.
Coinbase shares faced a decline of over 9% the previous day following reports that the Chicago Mercantile Exchange (CME) might enter the spot bitcoin trading market, potentially emerging as a competitor to Coinbase and other exchanges.
KBW, an investment banking firm, has also increased its Coinbase price target. Last month, KBW praised Coinbase for offering investors a unique opportunity to tap into the crypto economy’s long-term growth potential. In a research analysis, KBW raised its Coinbase price target from $160 to $230 while maintaining its market performance rating.
Coinbase has also faced regulatory trouble as the SEC’s lawsuit against the company can proceed. The SEC’s case alleges that Coinbase operates as an unregistered securities exchange, broker, and clearing agency. Judge Katherine Polk Failla of the US District Court of the Southern District of New York ruled that the SEC’s lawsuit holds “plausible” ground. As a result, Kathryn Haun, a former Assistant U.S. Attorney and partner at Andreesen-Horowitz, has stepped down from Coinbase’s board.
