On Thursday, JPMorgan (NYSE:JPM) made a notable adjustment to its stance on Coinbase (NASDAQ:COIN) Global Inc. (NASDAQ:COIN), shifting the stock's rating from Underweight to Neutral and setting a price target of $80.00. This change reflects the recent surge in cryptocurrency values, including Bitcoin and Ethereum.
The firm's analyst cited the significant increase in token prices during the fourth quarter of 2023 as a key factor for the upgrade. Initially, there was skepticism regarding the impact of U.S. spot Bitcoin exchange-traded funds (ETFs), with concerns that the market's enthusiasm might be based on unrealistic expectations. However, the actual market response to the ETFs' launch and the subsequent rise in Bitcoin prices have altered the firm's outlook.
The analyst pointed out that the appreciation of Bitcoin has led to better inflows into spot Bitcoin ETFs, which in turn has helped to drive up the prices of Bitcoin and other cryptocurrencies. This positive feedback loop is seen as a driver for sustained and improved activity levels in the crypto market, which could enhance Coinbase's earning potential going into the first quarter of 2024.
The assessment also took into account the launch of the gold ETF in 2004 and the growth of equity ETFs in the U.S. stock market, using these as benchmarks to gauge the potential impact of the Bitcoin ETFs. Despite recognizing the risks to Coinbase's stock price, including competition from ETFs and valuation concerns, JPMorgan believes that a Neutral rating is justified at this stage.
The firm has maintained its estimates and December 2024 price target for Coinbase, ahead of the company's earnings report, which is scheduled to be released after the market closes.
InvestingPro Insights
As Coinbase Global Inc. navigates the dynamic cryptocurrency market, real-time metrics and insights from InvestingPro shed light on the company's financial health and market performance. With a market capitalization of $38.37 billion and a striking Price / Book ratio of 6.48, Coinbase stands out in the financial technology sector. Despite a challenging year with revenue shrinking by 47.88% over the last twelve months as of Q1 2023, the company has demonstrated a strong return over the last three months, with a price total return of 63.4%.
Investors should note that while Coinbase has experienced significant returns recently, with a one-year price total return of 131.3%, it is currently trading at a high Price / Book multiple, which could be a point of consideration for valuation. Additionally, analysts predict that Coinbase will not be profitable this year, reflecting the company's current -50.72 P/E ratio. This is further supported by the fact that Coinbase has not been profitable over the last twelve months, as evidenced by its negative operating income margin of -55.53%.
InvestingPro Tips indicate that two analysts have recently revised their earnings projections upwards for the upcoming period, suggesting a potential shift in market sentiment or expectations for Coinbase. Moreover, the company's stock is known for its high price volatility, which could present both opportunities and risks for investors.
For those seeking a deeper dive into the analytics and future projections of Coinbase, InvestingPro offers additional tips that could help in making more informed investment decisions. Readers can explore further by using the coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to a wealth of investment insights and data.
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