TLDR
- Coinbase stock surged after JPMorgan upgraded its rating to “Overweight” and raised its price target to $404 per share.
- JPMorgan highlighted Coinbase’s Base layer-2 blockchain as a major growth opportunity with a potential $12 billion to $34 billion market.
- The bank noted that Coinbase’s USDC rewards program changes could boost annual earnings by $374 million.
- Coinbase stock climbed more than 9% following the upgrade, bringing its market capitalization to about $90.6 billion.
- Analysts expect Coinbase to report strong third-quarter results with a 71% year-over-year increase in earnings.
Shares of Coinbase Global Inc. (COIN) surged sharply following JPMorgan Chase’s upgrade on Friday. The bank raised its rating to “Overweight” from “Neutral” and lifted the price target to $404 per share. This price target suggests a potential upside of 15% from the stock’s current level.
JPMorgan Highlights USDC Rewards Strategy for Coinbase
JPMorgan highlighted the growth potential of Coinbase’s Base layer-2 blockchain. Analysts stated that Coinbase is “leaning into” its Base blockchain to capture more value. According to JPMorgan’s research, the launch of a Base token could unlock a market opportunity worth $12 billion to $34 billion.
The bank projected Coinbase’s share of this market opportunity could range from $4 billion to $12 billion. Analysts also noted that the distribution of the Base token would likely prioritize developers, validators, and the Base community. The launch of this token could enhance Coinbase’s long-term revenue prospects.
JPMorgan also pointed to Coinbase’s adjustments to its USDC rewards program as another driver of growth. The company may reduce interest rewards for most users, offering them primarily to Coinbase One subscribers. This move could boost Coinbase’s annual earnings by approximately $374 million, assuming current USDC yields and interest rates remain unchanged.
Coinbase’s USDC strategy represents a clear path to margin expansion. By focusing rewards on higher-value users, Coinbase strengthens its ability to generate stable revenue. Analysts believe these changes provide significant upside potential for Coinbase’s stock moving forward.
Coinbase Stock Hits New Highs, Analysts Bullish Ahead of Earnings
Coinbase stock climbed by over 9% on Friday to around $353 per share, lifting its market cap to approximately $90.6 billion. The company is set to report third-quarter earnings on October 30, with analysts expecting strong results. Analysts forecast earnings of $1.06 per share, reflecting a 71% year-over-year increase, and revenue of $1.74 billion, up 44.1%.
Investors are optimistic about Coinbase’s growing subscription and services segment. This area is expected to generate between $665 million and $745 million in revenue for the third quarter. Analysts remain bullish on Coinbase stock, given its regulatory developments and potential for further growth.
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Source: https://blockonomi.com/coinbase-stock-jumps-after-jpmorgan-upgrade-on-base-and-usdc-strategy/