Barclays analyst Benjamin Budish has upgraded Coinbase Global, Inc. (COIN) from Underweight to Equal-Weight, raising his price target from $206 to $169. Budish attributes this upgrade to the improving regulatory landscape for cryptocurrencies. He points to increased support for crypto from presidential candidates, as well as the approval of several spot crypto ETFs, as positive signs. This favorable environment has contributed to Coinbase’s continued revenue resilience.
While Budish acknowledges ongoing risks for Coinbase, such as fee compression in retail and pressure on profitability from lower rates and USDC rewards, he believes the improving regulatory environment, enhanced profit and loss profile, steady diversification, and strong industry leadership in the U.S. create a more balanced risk/reward profile.
Despite a recent 35% decline in share price over the past three months, in contrast to a 3% rise in the S&P, Budish remains optimistic about the overall outlook for Coinbase. The company expanded its workforce to manage increased volumes, but this also led to a surge in Technology, Development, and G&A expenditures. This rapid rise in spending resulted in inefficiencies as the company over-hired during peak activity levels.
Budish adjusted his model to reflect recent trends, including lower crypto asset prices and a reduced fed funds futures curve. This adjustment leads to more moderate near-term volume growth expectations, reflecting stable broader exchange volumes and modest anticipated growth. He also lowered his FY24 adjusted EPS estimate to $6.91 from $7.15, and decreased his FY25 adjusted EPS estimate from $6.26 to $5.11.
COIN shares were trading down 7.4% to $147.85 at the time of this report.
