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Coinbase shares are down some 20% in 2022, but analysts are generally upbeat on the stock.
Michael Nagle/Bloomberg
Stock in the cryptocurrency exchange
Coinbase
surged on Monday, rallying alongside Bitcoin, ether, and other digital assets. Analysts see more room for gains.
Coinbase
(ticker: COIN) shares jumped 7% in early New York trading, while
Bitcoin,
the leading cryptocurrency, rose 6.5% over the past 24 hours to above $47,500, erasing double-digit year-to-date losses.
Ether
was up 7% to near $3,400, reaching its highest level since early January. Tokens including
dogecoin,
and
Shiba Inu
took off as well.
Coinbase, which went public last year, is one of the stocks most closely correlated to moves in the price of Bitcoin, according to
Analysts say technical factors in Bitcoin’s price movements point to more gains, which could lift Coinbase stock as well.
“Bitcoin is facing heavy resistance, but if it is able to hold above the $46,000 level (which roughly marks the yearly open) for several days, I expect a move to $52,000, which is the next key resistance,” said Marcus Sotiriou, an analyst at digital asset broker
GlobalBlock
(BLOK).
While Bitcoin prices are now up on the year, shares in Coinbase remain down almost 20% so far in 2022. Analysts have trimmed their expectations for the stock’s performance: The average target for the price among those surveyed by FactSet has come down from almost $395 at the end of 2021 to $314 in March.
“Our estimates and target price rebase lower following the recent volatility in digital asset prices, as well as the company’s plan to accelerate scale via a sizable investment ramp in 2023,” said Peter Christiansen, an analyst at Citi, in a note last week.
When cryptocurrency prices fall or move violently, the volume of Bitcoin and other tokens exchanged on platforms like Coinbase tends to fall, hurting Coinbase’s revenue and share price. Bitcoin prices were down almost 25% year to date at their low point during a volatile spell earlier this year.
Importantly, there are reasons to be bullish about Coinbase stock that go beyond the price of Bitcoin. “While recent crypto volatility has likely hampered transaction activity [year-to-date], we assume strong Subscription and Services growth … improving the revenue mix in 2023,” Christiansen said.
67% of brokers surveyed by FactSet had an Overweight rating on Coinbase as of the end of 2021, but that number has now climbed to 76%. The consensus target price for the stock is almost 60% above Monday’s level near $198.
Write to Jack Denton at jack.denton@dowjones.com