H.C. Wainwright analyst initiates Buy rating for Coinbase (COIN)

Coinbase Global, Inc. (NASDAQ: COIN) has received a Buy Rating and $75 price target from H.C Wainwright analyst Mike Colonnese.

Initiating coverage for the Coinbase stock, Colonnese noted that at current prices (the stock traded around $56 on Wednesday) COIN rewards outweigh risks.

The analyst also opines that the crypto winter over, and that Bitcoin is likely in a new bull cycle. That indicates a positive outlook for the broader market. Meanwhile, Coinbase being increasingly more diversified revenue streams and shift away from the volatile transaction fees model is a good metric for one of the market’s best crypto stocks.

Coinbase stock: analysts see current prices at a 35% discount

Coinbase is the largest US-based cryptocurrency exchange. In 2022, the platform processed over $830 billion worth crypto trading volume across its retail and institutional businesses.

The company also held more than $80 billion in customer assets at the end of 2022, with this accounting for 10% of global crypto market cap. With 110 million verified customers and 8.3 million active users in over 100 countries, Coinbase ranks as the second largest crypto exchange in the world.

H.C Wainwright says it looks at the COIN stock “as a scarce asset.” Also, Coinbase’s dominance as the only publicly listed US-based crypto company with over $10 billion in market cap means it has an edge on rivals when it comes to attracting investor capital.

So, even if COIN is down 85% from its all-time high reached in November 2021 – compared to Nasdaq’s 24% drop, the analysts see current price levels as a great entry point. At $55 per share, COIN offers a chance to buy at a 35% discount when compared to historical levels.

COIN: H.C Wainwright rewards outweigh risks

Looking at the company’s valuation, the $75 price target is a 5.5 x EV/revenue multiple of the net revenue of Coinbase for 2023, which H.C Wainwright estimates at $2.89 billion. While this is in line with the crypto company’s historical average, Colonnese says the multiple could be higher should the Wells Notice the company recently received from US Securities and Exchange Commission (SEC) be lifted.

On potential market catalysts, the consensus points to crypto’s likely bullish continuation in 2023, Bitcoin’s next halving expected in April or May 2024 and greater regulatory clarity in the US.

When it comes to risks, COIN could be derailed by shrinking revenue, a fresh crypto correction, an uncertain regulatory environment, and extreme competition.