Coinbase (COIN) shares underestimate recovering profitability and accelerating expansion - Daiwa

Daiwa analyst Steven Nie upgraded Coinbase (NASDAQ: COIN) to Buy from Hold, raising the firm's price target on the stock to $65 from $58 per share in a note to clients on Monday, not long after the crypto exchange reported its first quarter results.

Coinbase's revenue rose "23% QoQ to USD773m, 18% ahead of the consensus," with its "adjusted EBITDA turning positive in 1Q23 at USD284m (vs. consensus' negative USD9m)," explained Nie.

"We believe the strong beat was mainly on the better-than-expected retail trading spread and strong interest income," the analyst wrote. "Even excluding the USD241m interest income in 1Q23, the positive adjusted EBITDA of USD43m indicates a profitable operation of its core business, despite the major restructuring (3,535 employees as of 1Q23, -29% YoY) to improve efficiency over 2022-23."

Daiwa believes the current Coinbase share price has largely priced in the US regulation uncertainty but "underestimated Coinbase's recovering profitability, accelerating global expansion and crypto-native innovations."

Premarket, Coinbase shares are down over 3% following a decline in Bitcoin's price, which is currently around $27,850, after declining over 2%.

By Sam Boughedda

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