BofA Upgrades Coinbase to Buy, Sees Revenue Diversification Beyond Retail Crypto Trading

Bank of America upgraded Coinbase shares to buy from neutral, leaving the price target unchanged at $340.

  • The upgrade was due to increasing signs of revenue diversification beyond just retail crypto trading, a trend which it thinks will accelerate further this year, the bank said in a note on Thursday.
  • The bank forecasts subscription and services revenue to increase to 16% of the company’s total revenue in 2023, from 12% in the third quarter of 2021.
  • This trend will be driven by a combination of offerings such as staking, earn campaign, Coinbase’s non-fungible token platform and decentralized finance products such as DeFi yield, the report said.
  • Scaling of these non-trading revenue streams could also lead to increased interest in the stock from institutional investors, Bank of America noted.
  • Uncertainty around regulation remains a potential risk, but Coinbase’s technology/innovation and brand are positive differentiators, the report added. The bank also sees potential upside to the company’s fourth quarter guidance.
  • Coinbase shares rose 1.05% in pre-market trading on Thursday.

Read more: Coinbase Offers Access to DeFi Yields With DAI and Compound

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