The Coinbase (NASDAQ:COIN) price target was lifted to $200 from $145 at Compass Point on Tuesday, with the firm maintaining a Buy rating on the stock.
Analysts noted the recent rise in crypto, which they believe will propel Coinbase to significant top and bottom-line growth in 2024. Since their last analysis, they have witnessed a dramatic climb in both crypto prices and trading volumes, surpassing their initial forecasts. Fueling the increase is the potential of lower interest rates in 2024 and the potential approval of spot Bitcoin ETFs, said the analysts.
"COIN has participated in this upswing, with spot ADVs tracking nearly 50% above our prior estimate for 4Q23 (and even higher in December), which we believe has been driven not only by BTC trading but also trading in other tokens," the analysts wrote. " We also note that COIN's recently launched international derivatives exchange has seen a material uptick in trading volumes, albeit from a very low base."
The price rally also benefits Coinbase's staking-as-a-service business, as they earn a cut of the staking yield on tokens like Ethereum and Solana.
Analysts anticipate this momentum to continue into 2024, driven by factors like easing interest rates, which are expected to lure both retail and institutional investors back to riskier assets, and potential market share gains from competitor Binance's recent regulatory woes.
"All-in, we believe the rise in crypto market activity, combined with COIN's cost-cutting initiatives, put the company in a great position to grow top and bottom line in 2024," the analysts concluded.