Blockchain
Crypto Exchange Coinbase (COIN) Had a Successful First Quarter: Analysts
Coinbase (COIN) had a blowout first quarter as it benefited from improving cryptocurrency market conditions and business diversification efforts, broker JMP said in a research report on Thursday.
The cryptocurrency exchange reported first-quarter net income of $1.2 billion and diluted earnings per share (EPS) of $4.40. The gains included a mark-to-market gain of approximately $650 million on crypto assets held for investment purposes. The largest cryptocurrency in the world, Bitcoin (BTC)gained more than 34% in the first quarter, while the CoinDesk 20 Index (CD20) increased by almost 17%.
The broker reiterated its market outperform rating and its price target of $320. Canaccord Genuity raised its price target to $280 from $240, while maintaining its buy rating. KBW also raised its price target from $230 to $240 and reiterated its market performance assessment. Shares were down 3.6% at $220.62 in early trading Friday.
“While we believe investors should remain level-headed regarding the ebbs and flows of enthusiasm in the industry, which often coincide with price fluctuations, we see a number of underlying trends that support our positive thesis that Coinbase will be a relevant player in virtually all markets. aspects of the crypto economy,” wrote JMP analysts led by Devin Ryan.
Several areas that JMP is particularly excited about for Coinbase include the introduction of its smart wallet, Coinbase Prime, and its growing international opportunities.
Revenue from consumer and institutional transactions grew 101% and 133%, respectively, from the previous quarter, Canaccord Genuity said in a report Thursday.
This growth was “driven by improved broader market activity from spot exchange-traded funds (ETFs), coupled with continued investment in product offerings and active user growth,” wrote analysts led by Joseph Vafi.
The broker said it was encouraged by the launch and traction around Coinbase layer 2 blockchain, Basic. “We believe the launch of this Layer 2 can help solidify COIN’s leading position by being able to drive low-cost transactions across what is a growing user/AUM base.”
Coinbase also reported strong growth balances for the USDC stablecoin, both on its platform and in terms of total market capitalization, and this generated $197 million in revenue, brokerage KBW said in a report on Friday. USDC it’s a stable currency issued by Circle, which is itself supported by Coinbase. The company earns gross interest on outstanding USDC balances.
Looking ahead, KBW said it is cautious on USDC balances due to recent rapid business growth and its “hypothesis that balances will eventually decline once rates begin to fall, even if the consensus narrative” higher for a longer period” has likely extended the longevity of USDC Balances in the short term.”