An analyst saw Coinbase's growth potential at 70%. What makes the company better than its competitors?

William Blair for the first time assigned a rating to shares of the crypto exchange Coinbase - and immediately advised to buy them. The analyst saw a 70% growth potential in the securities. He explained his optimism by the diversification of Coinbase's business model and the growing clarity in the regulation of the crypto market in the United States.

William Blair began analyst coverage of shares of cryptocurrency exchange Coinbase with an Outperform rating («above market»), which means an advice to buy the securities. William Blair analyst Andrew Jeffrey didn't give an exact target price for the securities, but said they have a potential upside of 70%, wrote CNBC. That translates to a possible price of about $433 per share versus $254.94 at the close of trading on Tuesday, June 10, the network noted.

Jeffrey attributed his optimism to the diversification of Coinbase's business model, as well as the growing clarity on the regulation of the crypto market, which now has the support of US President Donald Trump. The time when cryptocurrencies remained on the periphery is coming to an end: it is being replaced by an era of consistent regulation and expanding usage scenarios that may even supplant the traditional global financial system in the long run, according to analyst William Blair.

«While many participants in the crypto ecosystem should benefit [from this], we believe Coinbase's leadership creates an inherent advantage and see it as the best way for growth-oriented investors to participate in the crypto renaissance,» Jeffrey wrote.

Among Coinbase's advantages, he highlighted its mature product line, including custodial wallets (where private keys and assets are stored by the user rather than the exchange) and stablecoins (cryptocurrencies whose exchange rate is tied to real currencies), revenue growth from subscription-based services, and high trust from institutional and retail customers.

In late May, Jefferies maintained a Hold rating (advice to hold) but increased its target price on Coinbase shares from $210 to $260. That's just 2% above the closing price on Tuesday, June 10. In early June, analysts at Oppenheimer reiterated an Outperform rating and maintained a $293 target price, up 15% from the last close.

As follows from MarketWatch data, half of the analysts tracking Coinbase stock (17 out of 34) advise investors to hold (Hold rating). Another 15 advise selling (Buy and Overweight), and two recommend selling (Underweight and Sell ratings).