Coinbase's stock gets upgraded as this bullish driver is 'too large to ignore'

MW Coinbase's stock gets upgraded as this bullish driver is 'too large to ignore'

By Emily Bary

Citi sees 30% upside for Coinbase shares, partly because the regulatory landscape seems to be improving

Citi Research analyst Peter Christiansen acknowledges that Coinbase Global Inc. shares have gained 52% so far this year, but he's still switching to a bullish stance.

The key reason? A more upbeat assessment of the company's regulatory backdrop.

"[F]rom here we surmise the upside opportunity from a more conducive regulatory environment to be too large to ignore...potentially unlocking sidelined institutional capital, investment, and increased crypto-native and traditional finance collaboration," Christiansen wrote as he upgraded Coinbase shares $(COIN)$ to buy from neutral.

Don't miss: Ether could jump 90% following ETF approvals, even if the funds lack popularity of bitcoin

Christiansen now has a more optimistic view of Coinbase's ability to withstand a legal challenge from the Securities and Exchange Commission in light of the Supreme Court's recent move to overturn the Chevron Deference Doctrine. That "required courts to defer to federal agencies' interpretations of ambiguous statutes," he said.

"Notwithstanding the increased turbulence in the upcoming U.S. elections, we believe the risk/reward setup for Coinbase, particularly as to its defense against the SEC's lawsuit, has improved markedly in the past few weeks," Christiansen noted.

Further, he wrote of the possibility that Coinbase may "benefit additionally from a potential U.S. crypto catchup against relatively higher on-chain activity/liquidity that has developed abroad." The share of spot exchange volumes from North America has come down recently, he flagged.

Christiansen also discussed the arrival of ether exchange-traded funds. "The approval of the [ether] ETFs suggests other digital assets outside of [bitcoin] have the potential to be approved in the future, which can create further expansion of this part of Coinbase's business as the best-in-class provider of these services," he wrote. He thinks issuers will show preference to Coinbase given the company's position in the custody realm.

Read: Ethereum ETFs arrive Tuesday. Here's what you need to know before trading.

He upped his target price on Coinbase shares to $345 from $260. The new target is 30% above current levels.

-Emily Bary

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July 23, 2024 08:02 ET (12:02 GMT)

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