Coinbase Analysts: Crypto Exchange Well Positioned to Continue Strong Growth Trajectory

Coinbase Global Inc COIN shares started Friday reacting positively to cryptocurrency's mixed quarterly results, but have since retreated. Two analysts think the company is still worth looking at.

The Coinbase Analysts: Piper Sandler analyst Richard Repetto initiated coverage of Coinbase shares with an Overweight rating and $335 price target.

Reacting to the results, Rosenblatt Securities analyst Sean Horgan maintained a Buy rating and increased the price target from $400 to $450.

The Coinbase Theses:

Coinbase & Crypto To Evolve Together, Piper Sandler Says: Notwithstanding expectations for volatility in shares, Coinbase is favorably positioned to continue its strong growth trajectory, Piper Sandler analyst Repetto said.

Coinbase, according to the analyst, is an early mover and a recognized brand with a sole focus remaining on crypto.

"COIN looks to leverage their deep pools of liquidity, vast network, robust technologies and trusted platform to grow with the expanding cryptoeconomy opportunity," the analyst wrote in the note.

Over the past three years, the exchange has increased its market share of crypto market capitalization to 11.3% in the first quarter of 2021 from 4.8% in the first quarter of 2018, helped by its focus on Bitcoin and Ethereum, Repetto said. It is experiencing above-market growth in a rapidly expanding market, he added.

The exchange has experienced strong growth in its underlying operating metrics such as retail trading volume and monthly transacting users, or MTUs, Repetto noted. The analyst also observed maintenance of momentum into the quarter-to-date period of the second quarter.

Related Link: Coinbase Shares Open At $381, $100B Valuation On Debut

Coinbase, the analyst said, offers a comprehensive suite of services to crypto customers across channels. While noting Coinbase continued to expand its array of supported assets, the analyst said he sees increased client engagement as it enables greater ways for users to gain crypto exposure.

"COIN is viewed as a leading crypto brand with other potential ways to monetize the growing revolution in the crypto market with subscription-like revenue streams such as storing, staking, borrowing & lending, etc," Piper Sandler said.

Coinbase and crypto, according to the firm, will continue to evolve together.

What Rosenblatt Liked About Q1: About 25% of MTUs invested and engaged with one or more non-investing products in the first quarter, up from 21% in 2020, Rosenblatt analyst Horgan said.

In the quarter, the exchange added support for seven new assets for trading and 13 new assets for custody, the analyst noted. At the end of the quarter, it supported 108 unique crypto assets for trading and custody, up from 90 at the end of 2020, he added.

See also: How to Buy Coinbase (COIN) Stock

Coinbase acquired Bison Trails, now part of its new Coinbase Cloud. This will allow companies to send and store, accept crypto payments and build their businesses with crypto-native infrastructure, Horgan noted.

Coinbase now has more than one million customers earning yield by staking their assets with Coinbase, the analyst said.

Management, the analyst said, expects meaningful growth in institutional revenues in 2021, driven by increasing volumes of institutional onboarding, higher capital allocations to crypto and increased trading volumes from existing clients.

COIN Price Action: At last check Friday afternoon, Coinbase shares were down 2.32% at $258.95.

Related Link: Why Coinbase Stock Has Analyst Remaining On The Sidelines

(Photo: Coinbase)