Bank of America (NYSE:BAC) revised its rating on Coinbase (NASDAQ:COIN) to Neutral from Underperform and increased its price target from $110 to $217.
According to the bank’s report, the current macroeconomic environment has fostered growth in cryptocurrency market capitalization and trading volume.
While the bank acknowledges the positive dynamics, it also highlights the risks associated with Coinbase, including its dependence on trading revenue and the ongoing SEC litigation.
Coinbase shares were up 2.5% in premarket trading Friday following the upgrade. The stock, which was trading around $204 at the time of publication, benefited from Bank of America’s revised outlook.
Analysts at Bank of America, led by Mark McLaughlin, highlighted several factors contributing to the upgrade, including Coinbase’s cost management and diversification efforts, which are expected to bolster earnings.
But analysts have warned that certain risks, such as Coinbase’s reliance on trading revenue and regulatory uncertainty related to the SEC lawsuit, could limit the stock’s potential upside.
The recent drop of more than 9% in Coinbase’s stock price following reports of potential competition from the Chicago Mercantile Exchange in spot Bitcoin trading highlights the volatile and competitive environment facing Coinbase and similar exchanges.
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