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Coinbase More Than Just Trading Platform, It's 'Mission-Critical' for Crypto, Cantor Says
The broker initiated coverage of the crypto exchange with an overweight rating and a $245 price target.
What to know:
- Cantor initiated coverage of crypto exchange Coinbase with an overweight rating and a $245 price target.
- Investors are not assigning enough value to the company's activities outside of crypto trading, the report said.
- Coinbase's layer 2 blockchain Base gives the firm an edge, Cantor said.
Coinbase (COIN) is more than just a crypto trading platform, Wall Street broker Cantor said in a research report Tuesday, initiating coverage of the stock.
Cantor assumed coverage of the crypto exchange with an overweight rating and a $245 price target. In early trading, the shares were up more than 5%.
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"Markets are missing what it is doing beyond trading, particularly with its L2 (Base) and its stablecoin relationship with Circle," analysts Brett Knoblauch and Thomas Shinske wrote. Coinbase shares are attractive at current levels, as they are trading at around a 32% discount to historical valuation multiples, the report added.
The broker sees both these segments as "instrumental in changing the narrative surrounding COIN, from being a cyclical crypto trading platform to being a mission-critical infrastructure of the crypto economy."
The report said the shares are expected to re-rate higher once investors have increased visibility into the earnings potential of Base and stablecoins.
Base gives Coinbase an edge, the report said. The layer 2's strong user growth creates a "flywheel effect" that benefits the crypto exchange with more transaction fees.
Cantor said the stablecoin opportunity is also being underappreciated by the market, especially given the potential for these cryptocurrencies to displace traditional finance cross-border payment rails.
Read more: Cathie Wood’s ARK Buys Over $13M Worth Coinbase Shares During Market Rout
Will Canny
Will Canny is an experienced market reporter with a demonstrated history of working in the financial services industry. He's now covering the crypto beat as a finance reporter at CoinDesk. He owns more than $1,000 of SOL.
