On Friday, Coinbase (NASDAQ:COIN) shares rose following an upgrade from investment bank Oppenheimer. The company changed its rating from “outperform” to “outperform,” setting a new price target of $160 per share. This update reflects a positive outlook on the future of Coinbase, despite recent challenges in the cryptocurrency market.
According to a article By Helene Braun and Will Canny for CoinDesk, Oppenheimer analyst Owen Lau noted Coinbase's resilience during the recent crypto winter. Lau says that unlike many of its peers that struggled or collapsed, Coinbase not only survived but continued to actively defend its business and the industry at large. This resilience, according to Lau, is a testament to the strength and toughness of the company's management team, qualities that he believes investors often underestimate.
A key factor in Oppenheimer's optimistic assessment is the legal landscape surrounding Coinbase. Lau suggests there is a "good chance" that Coinbase will emerge victorious in its lawsuit against the Securities and Exchange Commission (SEC), or that the court will dismiss the case. This possible legal victory is considered very positive for the future of the company.
Coinbase's involvement in the Bitcoin exchange-traded fund (ETF) market is another cornerstone of Oppenheimer's improvement. The company acts as custodian for several issuers of the ten recently approved bitcoin spot ETFs. This feature is expected to not only generate revenue, but also benefit from an influx of new investors, increased adoption, and higher trading volumes.
The upgrade contrasts with JPMorgan's downgrade of Coinbase stock to an underweight rating on Jan. 22.
JPMorgan said in a research report on Monday, downgrading US stock exchange Coinbase (COIN) to underweight from neutral, with an unchanged price target of $80.
According to CoinDeskAnalysts led by Kenneth Worthington wrote:
“While we continue to view Coinbase as the dominant US exchange in the crypto ecosystem and a leader in global cryptocurrency trading and investing, we believe the catalyst for bitcoin ETFs that brought the ecosystem out of its winter will disappoint participants. From the market.“
However, Lau disagrees with this assessment. He maintains that despite the current low fees for trading spot Bitcoin ETFs, the vast majority of retail traders are likely to continue using platforms like Coinbase. This preference is attributed to the broader blockchain participation opportunities offered by such platforms.
Lau also highlighted the increase in Coinbase's trading volume since the beginning of the year. He predicts this volume will continue to grow over the next two years, potentially increasing by up to 66% year over year. This growth is expected to be driven by factors such as the Federal Reserve's planned interest rate cuts and the upcoming bitcoin halving in April.
Despite a notable 400% rise in share value last year, fueled by a recovery in the broader crypto market, Coinbase shares have underperformed this year, falling more than 20% . On January 26, COIN closed at $125.20, up 3.46% on the day.
Featured image via Coinbase
