BofA Upgrades Coinbase to Buy, Sees Revenue Diversification Beyond Retail Crypto Trading

BofA Upgrades Coinbase to Buy, Sees Revenue Diversification Beyond Retail Crypto Trading

Bank of America upgraded Coinbase shares to buy from neutral, leaving the price target unchanged at $340.

  • The upgrade was due to increasing signs of revenue diversification beyond just retail crypto trading, a trend which it thinks will accelerate further this year, the bank said in a note on Thursday.
  • The bank forecasts subscription and services revenue to increase to 16% of the company’s total revenue in 2023, from 12% in the third quarter of 2021.
  • This trend will be driven by a combination of offerings such as staking, earn campaign, Coinbase’s non-fungible token platform and decentralized finance products such as DeFi yield, the report said.
  • Scaling of these non-trading revenue streams could also lead to increased interest in the stock from institutional investors, Bank of America noted.
  • Uncertainty around regulation remains a potential risk, but Coinbase’s “technology/innovation and brand are positive differentiators,” the report added. The bank also sees potential upside to the company’s fourth quarter guidance.
  • Coinbase shares rose 1.05% in pre-market trading on Thursday.
  • The upgrade was due to increasing signs of revenue diversification beyond just retail crypto trading, a trend which it thinks will accelerate further this year, the bank said in a note on Thursday.

    The bank forecasts subscription and services revenue to increase to 16% of the company’s total revenue in 2023, from 12% in the third quarter of 2021.

    This trend will be driven by a combination of offerings such as staking, earn campaign, Coinbase’s non-fungible token platform and decentralized finance products such as DeFi yield, the report said.

    Scaling of these non-trading revenue streams could also lead to increased interest in the stock from institutional investors, Bank of America noted.

    Uncertainty around regulation remains a potential risk, but Coinbase’s “technology/innovation and brand are positive differentiators,” the report added. The bank also sees potential upside to the company’s fourth quarter guidance.

    Coinbase shares rose 1.05% in pre-market trading on Thursday.

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