On Friday, Coinbase (NASDAQ:COIN) Global Inc. (NASDAQ:COIN) received an upgrade from Keefe, Bruyette & Woods to a Market Perform rating, with its price target significantly raised to $160 from the previous $93. The adjustment comes in response to the company's robust revenue performance, which exceeded expectations due to increased retail engagement at the close of the year.
The firm noted the impressive crypto price movements year-to-date, with Bitcoin (BTC) climbing 23% since the start of the year and a remarkable 113% year-over-year increase. This surge has had a positive effect on Coinbase's revenue streams. Additionally, there has been a noteworthy uptick in the growth of USDC balances, which have risen by 15% year-to-date.
The decision to modify the rating and price target is also based on the expectation of sustained revenue growth for Coinbase. The firm's new price target of $160 reflects upgraded estimates and a significantly higher valuation multiple of 25 times the adjusted EBITDA excluding stock compensation.
Keefe, Bruyette & Woods emphasized caution regarding the sustainability of the current level of retail enthusiasm and speculative activity. Despite this caution, the firm recognized the strong performance in the cryptocurrency sector and its knock-on impacts on Coinbase's financials as reasons for the rating change.
Coinbase's improved outlook is a result of multiple factors, including the overall positive trajectory of the cryptocurrency market and the company's ability to capitalize on these trends. The new price target and rating reflect the firm's revised expectations for Coinbase's future performance in this dynamic market.
InvestingPro Insights
Following the upgrade by Keefe, Bruyette & Woods, Coinbase Global Inc. (NASDAQ:COIN) has shown signs of robust performance that align with the firm's optimistic outlook. InvestingPro data underscores this sentiment, highlighting a 16.68% return over the last week and a remarkable 152.58% return over the past year, showcasing significant investor confidence and market momentum.
These positive trends are further supported by two InvestingPro Tips that may be of interest to investors. Analysts have revised their earnings upwards for the upcoming period, indicating a potential continuation of Coinbase's strong revenue performance. Additionally, the stock has demonstrated a strong return over the last month, with a 23.75% increase, suggesting that the recent surge in crypto prices has indeed had a favorable impact on the company's valuation.
While the company's Price / Book ratio stands at 6.69, reflecting a premium valuation, it's important to note that analysts do not anticipate the company will be profitable this year, and the stock has been trading with high price volatility. These factors should be considered when evaluating the potential risks and rewards associated with investing in Coinbase.
To gain further insights and access more InvestingPro Tips for Coinbase, consider subscribing to the InvestingPro platform using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are currently 11 additional InvestingPro Tips listed, which can provide a deeper analysis and help make more informed investment decisions.
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