Coinbase Global has seen a recent surge in stock prices, with one analyst predicting a three-fold increase in value. Bo Pei, an analyst at U.S. Tiger Securities, upgraded Coinbase to Buy from Hold and raised the stock price target to $200. This move makes him the most bullish of more than 20 analysts surveyed by FactSet.
Shares in Coinbase closed at $75.14 on Tuesday. The last time the stock was above $200 was a year ago.
“Crypto has started a new bull run, and so has Coinbase,” Pei said in a Monday note. “We believe crypto price is the main factor to consider when investing in Coinbase. We believe a crypto bull market will drive significant revenue growth.”
Indeed, crypto prices have proved to be a key factor for Coinbase stock, for several reasons. Not only is Coinbase a stock that often moves in step with the price of Bitcoin and other cryptocurrencies, but the company has also seen significant revenue growth as interest in digital currencies has surged.
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The crypto market is on an impressive winning streak, with Bitcoin rallying some 70% this year from the depths of a bear market. The price has hit its highest point since June, when the crypto crash accelerated with a string of bankruptcies. Our thesis assumes that a new crypto bull market has begun and Coinbase’s revenue and profit could recover to its 2021 level, when Coinbase was trading at above $200.
Nevertheless, Pei sees some risks for Coinbase, chief among which is regulation. U.S. lawmakers and regulators have taken a much harder look at crypto companies in the past year. Scrutiny has only accelerated after the collapse of FTX and the meltdowns of two banks that served the digital-asset industry.
The implosions of Silvergate Capital and Signature Bank were initially a setback for crypto prices, but Bitcoin has rallied in response to wider concerns about banks that have griped about crypto companies.