Cryptocurrency exchange Coinbase Global (NASDAQ:COIN) has its fair share of skeptics amid the regulatory crackdown on the sector and fading cryptocurrency interest. However, analysts are going out on a limb today and doubled their price target on the stock amid the recent big boy Bitcoin ETF applications and a positive read-through on the Ripple v. SEC decision.
Canaccord Genuity analysts doubled their price target on the stock to $140 from $70, while reiterating a Buy rating. The new price target suggests 42% upside to Monday's closing price.
"While Coinbase remains a crypto lightning rod in many respects, we cannot but see the company gaining material momentum across a variety of different fronts, with some of them happening in just the last few weeks. In particular, several leading asset managers have just recently entered into surveillance sharing agreements (SSAs) with COIN in their refiled spot BTC ETF applications," the analysts commented.
In Q2, there was a renewed effort to approve a spot BTC ETF with applications from major global asset managers. BTC's outstanding performance in the past year drove this push, but the SEC quickly denied applications due to concerns about surveillance-sharing agreements. However, leading players like BlackRock (NYSE:BLK), Fidelity (NYSE:FNF), Grayscale, Purpose Investments, and the CBOE resubmitted applications, naming Coinbase as the responsible party for market surveillance. This strengthens Coinbase's position as a trusted exchange with ample market share to conduct effective surveillance, the analyst notes. If approved, spot BTC ETFs could boost Coinbase's trading volumes, AUM, and revenue, alongside earnings from surveillance-sharing agreements.
On the Ripple decision, analysts note the pendulum is swinging back in COIN's direction.
"This ruling has a direct impact on the SEC case against COIN, which at its crux asserts that all cryptos traded in the secondary market are securities and thus the exchanges themselves must fall under existing securities regulation," the analysts commented. "In our view, this ruling could likely make the SEC move off its extreme positions and help Coinbase validate its position in its own case, which is closely based on the same argument. While we would rather not have such regulatory scrutiny, we believe it presents as much of an opportunity for the medium term as it does a risk to the short term."