The brokerage firm has increased its price target for Coinbase from $160 to $230 and maintained its market perform rating. According to a research report, Coinbase offers unique exposure to the long-term growth of the crypto economy.
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Coinbase’s trading activity has shown remarkable growth, with daily volume averaging $5.1 billion in March, the report noted. The stock of the crypto exchange closed at $245.84 on Tuesday, marking a year-to-date increase of over 40%.
The analysts, led by Kyle Voigt, emphasized the significant revenue potential in the near term, citing factors such as the rising balances of USD Coin (USDC), increased levels of crypto assets, and a noticeable resurgence of retail engagement compared to the trough levels in 2023.
USDC outstanding balances witnessed a 32% growth in the first quarter, with USDC being a stablecoin issued by Circle and backed by Coinbase. The report highlighted that Coinbase earns gross interest income on approximately 56% of USDC outstanding balances.
Additionally, the surge in trading volumes, with March’s average daily volume hitting $5.1 billion compared to $2.4 billion in February, is seen as a positive factor for the stock’s performance.
However, despite these positive indicators, the report acknowledged challenges such as Coinbase’s legal dispute with the U.S. Securities and Exchange Commission (SEC) and the uncertain regulatory landscape. These factors make it challenging for many institutional investors to consider owning the stock, according to the authors.
