BofA Securities has revised its price target for Coinbase (NASDAQ:COIN) Global Inc. (NASDAQ: COIN), reducing it to $196 from the previous $246, while maintaining a neutral stance on the stock.
The adjustment follows a recalibration of the firm's earnings per share (EPS) forecasts for the years 2024, 2025, and 2026. The new EPS estimates are set at $0.21, $0.89, and $1.34, respectively, a change from the prior predictions of $0.19, $0.94, and $1.45.
The updated near-term estimates reflect an uptick in retail client engagement, noted by a record high in equity and options volumes extrapolated from July and August data.
This increase in activity is attributed to a surge in client transactions, including margin and securities lending. The revision also acknowledges strong net deposits, which have shown a 32% annualized increase for July and August.
This growth in deposits is partially credited to the positive market conditions and the conclusion of Coinbase's Retirement matching promotion that ended in July.
BofA Securities has also raised its price objective (PO) on Coinbase to $33, up from $32. The new PO is based on an 11x multiple of the firm's 2026 EPS estimate. This adjustment reflects the firm's recognition of Coinbase's recent performance and the impact of market dynamics on the company's financial outlook.
Coinbase, a leading cryptocurrency exchange platform, has been experiencing variable market conditions, which have influenced investor engagement and activity levels. The company's strategic initiatives, like the Retirement matching promotion, have played a role in attracting client deposits, showcasing the firm's adaptability in a rapidly evolving market.
In other recent news, Coinbase Global Inc. continues to challenge the Securities and Exchange Commission's decision to deny its petition for new rulemaking regarding digital assets. The company is seeking clear rules defining when a digital asset is considered a security. This legal action follows a noticeable surge in U.S.-listed cryptocurrency-related stocks, driven by the Federal Reserve's decision to reduce interest rates.
Recent developments also include various analyst notes. Citi has reiterated its Buy rating on Coinbase shares with a steady price target of $345.00. Barclays, on the other hand, upgraded the cryptocurrency exchange from Underweight to Equal Weight, while Jefferies lowered its price target for Coinbase to $220 from $245, maintaining a Hold rating, due to declining transaction revenue caused by softer market conditions.
Coinbase's Q2 results showed a total revenue of $1.4 billion and an adjusted EBITDA of $596 million. However, the third quarter is expected to see a decrease in this revenue stream, aligning with the Street's expectations. The company's Subscription and Services revenue rose by 17%, driven by a 23% increase in staking revenue and a 22% increase in stablecoin revenue.
InvestingPro Insights
To complement BofA Securities' analysis, recent data from InvestingPro offers additional insights into Coinbase's financial performance and market position. As of the last twelve months ending Q2 2024, Coinbase reported a substantial revenue growth of 74.22%, with total revenue reaching $4.49 billion. This growth aligns with the increased retail client engagement noted in the BofA report.
InvestingPro Tips highlight that Coinbase is trading at a low P/E ratio relative to its near-term earnings growth, with a current P/E ratio of 26.95. This could suggest potential undervaluation, especially considering the company's strong revenue growth. Additionally, analysts anticipate sales growth to continue in the current year, which may support the positive outlook on client activity mentioned in the article.
It's worth noting that Coinbase's stock has shown high volatility, with a significant price drop of 27.47% over the last three months. This volatility aligns with the dynamic nature of the cryptocurrency market and could present both risks and opportunities for investors.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Coinbase, providing a deeper understanding of the company's financial health and market position.
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