Bank of America Upgrades Coinbase Rating to Neutral, Raises Price Target to $217

Bank of America Upgrades Coinbase Rating to Neutral, Raises Price Target to $217

Bank of America (BAC) has upgraded its rating on Coinbase (COIN) shares from underperform to neutral, significantly raising its price target for the cryptocurrency exchange from $110 to $217. This change reflects a positive outlook for Coinbase, with several key factors driving this decision.

Bank of America Cites Favorable Market Conditions

Bank of America’s analysts, led by Mark McLaughlin, cited the favorable macro backdrop that has bolstered the cryptocurrency markets and driven increased trading volumes as a primary reason for the upgrade. Additionally, they praised Coinbase’s commitment to expense discipline and diversification, which could contribute to improved earnings.

Despite this positive outlook, the analysts acknowledged potential risks that could limit the stock’s upside. They noted Coinbase’s reliance on transaction revenue for profitability as a potential challenge, particularly if market conditions change. Furthermore, the ongoing lawsuit between Coinbase and the U.S. Securities and Exchange Commission (SEC) adds a layer of regulatory uncertainty that could impact the company’s operations.

Coinbase shares had declined over 9% the previous day following reports that the Chicago Mercantile Exchange (CME) might enter the spot bitcoin trading market, potentially emerging as a competitor to Coinbase and other exchanges.

KBW Increases Coinbase Price Target to $230

In addition to Bank of America’s upgrade, investment banking firm KBW has also increased its price target for Coinbase. Last month, KBW highlighted Coinbase’s unique position in the crypto economy’s long-term growth potential, raising its price target from $160 to $230 while maintaining its market performance rating.

Regulatory Challenges Persist

Coinbase continues to face significant regulatory challenges. Last month, Judge Katherine Polk Failla of the US District Court of the Southern District of New York ruled that the SEC’s lawsuit against Coinbase could proceed. This decision followed Coinbase’s motion to dismiss the SEC case, which includes allegations that the exchange operates as an unregistered securities exchange, broker, and clearing agency.

In her ruling, Judge Failla stated that the SEC’s lawsuit held “plausible” ground, noting that the court found sufficient evidence that Coinbase operates under federal securities laws and engages in the unregistered offer and sale of securities through its Staking Program.

Additionally, Kathryn Haun, a former Assistant U.S. Attorney and partner at Andreesen-Horowitz, has stepped down from Coinbase’s board, further highlighting the ongoing challenges facing the company.