Investment bank and broker-dealer, Keefe, Bruyette & Woods (KBW), has revised its current price projection for Coinbase’s stock by over 40%.
In its latest research report, the bank raised its year-end price target for the American crypto exchange from $160 to $230 while maintaining its market-performing rating. KBW highlighted Coinbase’s unique exposure to the long-term growth of the crypto economy as a key factor behind the adjustment.
The adjustment follows Coinbase’s stock closing at $245.84, marking a year-to-date growth of more than 40%, according to data from Seeking Alpha. KBW attributed this growth to several factors, including a 32% increase in the outstanding balance of USD Coin (USDC) during the first quarter of 2024. Notably, USDC stablecoin is issued by Circle, a Coinbase-backed crypto firm, and Coinbase earns gross interest income on approximately 56% of USDC’s outstanding balances.
Additionally, the surge in trading volume has significantly influenced Coinbase’s stock price. The exchange’s average daily volume (ADV) for March reached $5.1 billion, substantially higher than February’s $2.4 billion, according to KBW findings.
Despite these positive indicators, Coinbase faces ongoing legal challenges, notably from the United States Securities and Exchange Commission (SEC). The current regulatory uncertainty presents a barrier for institutional investors considering the purchase of Coinbase stock, KBW noted.
Last year, the SEC accused Coinbase of operating an unlicensed securities exchange, and the lawsuit has intensified over time. In a recent development, US Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York dismissed Coinbase’s motion to dismiss the SEC’s suit. This decision moves the case forward, with an April 19 deadline for both parties to settle on a case scheduling plan, as reported by Reuters.
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