Among crypto-correlated equities, it’s difficult to find a more familiar and more correlated name than exchange operator Coinbase (NASDAQ: COIN).
For better or worse, many investors assume that Coinbase’s business model relies heavily on cryptocurrency prices soaring, implying the shares of the exchange operator are vulnerable when bitcoin and its brethren retreat. That scenario is on display – in a positive fashion – this year as a substantial crypto price resurgence is fueling massive gains in Coinbase stock.
Shares of the California-based company soared 11.78% on above-average volume Tuesday, extending the stock’s one-month gain to almost 29%. Since the start of 2023, the shares are up a staggering 137.33%. Now, analysts are getting bullish on the name.
On Tuesday, Bo Pei, an analyst at U.S. Tiger Securities, upgraded Coinbase to “buy” from “hold” while boosting his price target on the stock to $200 from $65. Not only is that the highest outlook among the 20 sell-side analysts covering the stock, but it also implies the shares can more than double from the March 21 close at $83.99. It’s been roughly a year since Coinbase traded at $200 and its 52-week high is $206.79.
“Crypto has started a new bull run, and so has Coinbase,” Pei said in a Monday note. “We believe crypto price is the main factor to consider when investing in Coinbase. We believe a crypto bull market will drive significant revenue growth.”
Amid a budding crypto resurgence, Coinbase could get a lift as more previous clients increase trading activity on the platform and as new crypto bulls join the party.
“Our thesis assumes that a new crypto bull market has begun and Coinbase’s revenue and profit could recover to its 2021 level when Coinbase was trading at above $200,” noted Pei.
Perhaps making Coinbase all the more appealing is that despite the fact that bitcoin is on fire to start 2023, the largest digital currency by market value still needs to more than double to reclaim its November 2021 highs of around $69,000. If that scenario comes anywhere close to playing out, Coinbase stock’s crypto correlations could work in favor of investors.
“And digital assets are on an impressive winning streak. While Bitcoin remains well below its late 2021 high near $69,000, the largest crypto has rallied some 70% so far this year from the depths of a bear market. The price has hit its highest point since June, when the crypto crash accelerated with a string of bankruptcies,” reported Jack Denton for Barron’s.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.