Coinbase (COIN) Price Target Raised at Mizuho on Higher Bitcoin (BTC) Prices

October 21, 2021 6:30 AM EDT
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Price: $177.58 +4.34%

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    16 Buy, 4 Hold, 2 Sell

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    Up: 30 | Down: 16 | New: 32
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Mizuho analyst Dan Dolev raised estimates and a price target on the Neutral-rated Coinbase (NASDAQ: COIN) stock to $300.00 per share from the prior $230.00.

Bitcoin (BTC) price hit a fresh record high yesterday above the $66,000 mark to push the total crypto market capitalization above the $2.7 trillion handle.

Dolev’s analysts point to share losses for Coinbase through Q3 to 1.6% from 1.8% in Q1, although the situation has improved in October.

‘COIN remains very levered to fluctuations in Bitcoin prices. Our quarterly build suggests ~10% potential upside to 3Q consensus revenue estimates. This, however, assumes no steep declines in COIN's take rates vs. 2Q. More specifically, our analysis of actual volume data for 3Q points to ~$315bn of volume for the quarter. Assuming total yield compresses at a more modest pace (in-line with the prior trend of moderating yield declines) vs. 2Q implies ~ $1.68bn of revenue, which is ~8% above consensus. We are raising 3Q & FY revenue estimates to reflect this change,” Dolev said in a client note.

The analyst also reiterated his belief that Coinbase’s ARPU and margin will both stay under pressure going forward, hence the Neutral rating.

“With nearly 90% of total revenue reliant on transaction fees, user overlap with Robinhood, PayPal, Square's Cash App, and high user sensitivity to transaction fees, the specter of downward pressure on commissions is a concern. Over time, COIN's fees may face downward pressure from competing platforms following the footsteps of zero-commission stock trading, because platforms like PYPL and Cash App primarily use crypto trading products as engagement tools. In contrast, COIN relies on commissions for the vast majority of its revenue.”

Shares of Coinbase closed 3% higher yesterday to trade at $314.71.

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