Piper Sandler analysts downgraded cryptocurrency exchange Coinbase Global (NASDAQ:COIN) to Neutral from Overweight, citing valuation and regulatory uncertainty.
The analysts see “too much uncertainty to prudently project revenues in future years” for them to remain Overweight-rated on COIN shares. Moreover, they highlight the robust year-to-date rally and the fact that COIN stock is up ~55% since June 6th when the SEC accused COIN of operating an unregistered securities exchange.
“We believe the appreciation has likely been driven by a combination of rising crypto prices and a number of large asset managers filing for spot Bitcoin ETFs (some of which have named COIN as custodian). However, rising crypto prices have not translated to increased trading volumes for COIN in recent quarters and the timing of a spot bitcoin ETF approval is anyone’s guess,” the analysts said in a client note.
Along these lines, they expect the crypto exchange to report its lowest quarterly trading volumes and monthly transacting user totals in over two years.
“While we continue to believe COIN is positioned to be a major player in the space when we do eventually get regulatory clarity in the US, we would like to see more progress on the regulatory front and a convincing turnaround in the underlying fundamentals of the business before becoming more positive on COIN,” the analysts concluded.
The price target goes from $65 to $60 per share.