An analyst advised buying Coinbase shares. He sees three growth drivers

Investment firm BTIG started covering shares of Coinbase, the largest publicly traded cryptocurrency exchange, immediately with a "buy" advisory and expects them to grow by more than 20% more. The analyst believes that Coinbase has diversified its business and transformed itself from a retail platform for traders into a more sustainable ecosystem that capitalizes on services, stablecoins, derivatives and the blockchain platform Base. Since the beginning of the year, the crypto exchange's shares have brought investors nearly 40% returns.

BTIG initiated coverage of Coinbase securities with a Buy recommendation and a $410 target price - up 21.5% from the last close, Investing.com reports. The BTIG analyst emphasized that investors should take a broader view of the company than just a retail trading platform. According to him, Coinbase has diversified its business and can now make money not only on speculative trading, but also on the growing use of digital assets in general. Thus, now subscriptions and services bring Coinbase about 40% of revenue, while two years ago over 70% of its revenue was provided by trading commissions. This diversification has made Coinbase's revenue more sustainable, BTIG noted.

The analyst identified three main drivers of Coinbase's revenue growth: the derivatives market, stablecoins and the Base developer platform. According to him, the purchase of derivatives exchange Deribit gives the company access to a larger share of the global futures and options market, which accounts for about 75% of all crypto transactions. Expanding the use of the dollar-linked USDC stablecoin, issued by Circle, should further increase revenue through both trading activity and commission sharing - already, partnerships in this area are generating over $1 billion a year for Coinbase. Another source of growth will be the Base blockchain network launched last year: developers use it to create financial and consumer applications directly on the blockchain.

In addition, BTIG noted: Coinbase has managed to maintain one of the strongest brands in the crypto industry despite years of regulatory pressure. This gives the company a chance to pull customers from offshore exchanges, as institutional investors are increasingly looking for regulated platforms. According to the broker's assessment, Coinbase will remain dependent on trading volumes in the near future, but diversification through services, custodial services, infrastructure and derivatives allows it to act as a kind of "bridge" between traditional finance and the blockchain economy.

In trading on October 1, Coinbase quotes jumped by 3.6% to $349.8. This is their maximum for almost two weeks. Since the beginning of the year, the market value of the crypto exchange has grown by 39%. For comparison, the main U.S. stock index S&P 500 for the same period added almost 14%.

One of the fresh recommendations on Coinbase is an increase in the target price on September 18 from an analyst at Mizuho. The investment bank's expert Dan Dolev increased the target on Coinbase from $267 to $300 (11% lower than the last close), while maintaining a neutral rating. Dolev believes the exchange could benefit from a Fed rate cut by increasing trading activity. Coinbase stock deserves recognition for its cost management, growth and long-term structural drivers, he said. At the same time, he emphasized that he sees more potential and less risk in AI stocks.

In general, Wall Street's opinions on cryptocurrency exchange shares differ. A total of 37 experts have assigned ratings to them: 15 of them recommend buying (Buy and Overweight ratings), 18 advise to hold in the portfolio (Hold), and four - to sell (Sell). The consensus target price of $372.8 implies an increase in the company's market value by another 10.5% from the last close on September 30.

This article was AI-translated and verified by a human editor