The broker raised its price target for Coinbase to $230 from $160.
The broker believes the crypto exchange offers unique exposure to the long-term growth of the crypto economy.
Coinbase’s trading activity continues to surge, with daily volume for March averaging $5.1 billion, the report said.
Coinbase (COIN) offers investors unique exposure to the long-term growth of the crypto economy, KBW said in a research report on Tuesday.
KBW raised its Coinbase price target to $230 from $160 while maintaining its market perform rating. The crypto exchange’s stock closed at $245.84 on Tuesday, having risen over 40% year-to-date.
“We see a significant near-term revenue opportunity from inflecting USD Coin (USDC) outstanding balances, elevated crypto asset levels, and an apparent retail re-engagement from trough levels in 2023,” analysts led by Kyle Voigt wrote.
USDC outstanding balances continue to grow, rising 32% in the first quarter, the report said. USDC is a stablecoin issued by Circle, which is itself backed by Coinbase. The crypto exchange earns gross interest income on about 56% of USDC outstanding balances, KBW said.
Surging trading volumes are also a tailwind for the stock, with March average daily volume (ADV) of $5.1 billion versus $2.4 billion in February, the report added.
Still, Coinbase’s legal battle with the U.S. Securities and Exchange Commission (SEC) and the uncertain regulatory environment make it very difficult for many institutional investors to own the stock, the authors wrote.
Read more: Coinbase Is More Than Just a Crypto Exchange: JMP Securities
