On Wednesday, BofA Securities adjusted its outlook on Coinbase (NASDAQ:COIN) Global Inc. (NASDAQ:COIN), raising the stock price target to $110 from the previous $92, while maintaining an Underperform rating on the stock. The revision follows recent legal developments involving the cryptocurrency exchange and the U.S. Securities and Exchange Commission (SEC).
A federal judge recently ruled against Coinbase's motion to dismiss an SEC lawsuit. The lawsuit alleges that 13 non-Bitcoin/Ethereum tokens traded on Coinbase's platform are securities, and that the company has been operating as an unregistered securities exchange. With the motion to dismiss denied, the case is set to move to the discovery phase and could potentially go to trial unless a summary judgment is granted.
The outcome of the SEC case is significant for Coinbase as the revenues from the tokens in question represented about one-quarter of the company's net revenues in 2023. If the tokens are ultimately deemed to be securities, Coinbase would be faced with a decision to either register as a securities exchange or delist the tokens, as well as potentially other non-Bitcoin/Ethereum tokens.
BofA Securities has updated its financial models for Coinbase, now forecasting net revenues of $4,813 million for fiscal year 2024 and $4,889 million for fiscal year 2025, up from previous estimates of $3,893 million and $4,068 million, respectively. This is in contrast to the consensus estimates, which stand at $4,957 million for 2024 and $5,101 million for 2025.
Adjusted EBITDA expectations for 2024 and 2025 have also been increased to $1,958 million and $2,025 million, respectively, from the former forecasts of $1,277 million and $1,385 million. These updated figures compare to the consensus estimates of $2,318 million for 2024 and $2,141 million for 2025.
The new stock price objective is based on a 5.0 times multiple of the company's projected 2024 net revenues, which has been slightly adjusted due to movements in the comp group multiple.
InvestingPro Insights
As investors digest BofA Securities' revised outlook on Coinbase Global Inc. (NASDAQ:COIN), it's important to consider several key metrics and insights from InvestingPro. The company is currently trading at a high earnings multiple, with a P/E ratio of 605.05 and an adjusted P/E ratio for the last twelve months as of Q4 2023 at 1260.19, indicating a significant expectation of growth built into the stock price.
Despite a revenue decline of 7.08% over the last twelve months, analysts are optimistic about Coinbase's future profitability, with net income expected to grow this year and three analysts having revised their earnings upwards for the upcoming period.
InvestingPro Tips highlight that Coinbase's stock price movements have been quite volatile, which could be a point of consideration for risk-averse investors. However, the stock has shown a strong return over the last three months, with a 69.87% price total return, and an impressive one-year price total return of 288.61%. It's noteworthy that Coinbase does not pay a dividend to shareholders, which could influence investors looking for regular income streams.
For those seeking a more in-depth analysis, there are additional InvestingPro Tips available that could further inform investment decisions. Interested readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to these valuable insights. With the next earnings date set for May 8, 2024, investors may want to stay informed on the latest developments and expert assessments available on InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.