'More than an exchange': Coinbase shares get two upgrades in a week

Coinbase shares received two upgrades in a week. Investment company Rothschild & Co. Redburn recommended buying securities of the largest public crypto exchange, expecting their growth by 12%. According to its analysts, the company is becoming a beneficiary of the introduction of cryptocurrencies in traditional financial services. A few days earlier, BTIG analysts started covering Coinbase shares with a buy recommendation: they noted that the trading platform is reducing its dependence on commissions, which makes its revenue more sustainable.

Rothschild & Co. Redburn Nicholas Watts raised his rating on Coinbase shares from Neutral to Buy on October 3, and raised his target price from $325 to $417, up 12% from the closing price of the last trade.

Redburn notes that the cryptocurrency exchange has diversified its revenue streams, reducing its reliance on retail trading commissions and building a full ecosystem of digital assets capable of serving both institutional and private clients, Barron's writes. Watts called Coinbase a "balanced bet on a wider distribution of digital assets," CNBC quoted him as saying.

He said the key drivers for the stock remain high trading volumes, rising token capitalization, and growing interest in crypto assets from large players, especially after the SEC approved spot bitcoin and Ethereum ETFs in the U.S. in 2024.

"Over the longer term, we expect to see increased interest from institutional investors, the emergence of applied use cases for digital assets and continued high engagement from retail traders," Watts wrote.

Coinbase now also claims revenue from cryptocurrency custody services, offering blockchain transactions through its back-end platform and other services, Barron's wrote. The exchange already provides infrastructure to more than 200 financial firms, Watts noted.

BTIG initiated coverage on Coinbase shares on October 1 with a buy recommendation and set a $410 target price on the stock, Investing.com reports. The brokerage firm said investors should view Coinbase as more than just a retail trading platform. According to BTIG, subscriptions and services now generate about 40% of the company's revenue, up from a reliance on trading commissions of more than 70% two years ago, giving the company a stronger revenue base.

BTIG believes that Coinbase's recent acquisition of derivatives exchange Deribit will allow it to increase its share of futures and options, which account for approximately three-quarters of total cryptocurrency trading volume globally. The company also continues to utilize Circle's USDC stackcoin to increase revenue through both trading activity and commission distribution. Coinbase already generates more than $1 billion annually from steiblcoin partnerships. BTIG cites the Base blockchain network, launched last year, as another growth driver as developers use it to build financial and consumer applications directly on the blockchain.

BTIG believes Coinbase retains one of the strongest brands in the industry. After years of regulatory scrutiny, this could help it win back market share from offshore platforms as financial institutions look for regulated platforms, analysts explained.

Goldman Sachs raised their target price on shares of Coinbase from $351 to $363 on October 3, maintaining a neutral rating, MarketBeat reports.

Overall, Wall Street's opinions on Coinbase are divided. Of the 38 analysts polled by FactSet, 17 recommend buying the stock, and 17 recommend keeping it in the portfolio. And only four advise selling the securities. The analysts' consensus price target is $373.5, which is roughly in line with the current value of the securities.

In trading on Friday, Coinbase shares rose 2.9% to $382.7, which was their highest since July 31. Over the past 12 months, quotes have grown by 120%.

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