Cryptocurrency

Street forecasts on Coinbase stock are 'too bullish': Needham


Needham & Company analysts have expressed caution about the overly optimistic projections surrounding Coinbase (NASDAQ:), suggesting that recent street forecasts for the company are “too bullish.”

Despite a strong Q1 performance, Needham sees a challenging backdrop for the remainder of the year, leading them to adjust their forecasts accordingly.

According to Needham, “Street forecasts became too bullish following a strong Q1, and now miss the weaker backdrop that includes material declines from Q1 highs for many crypto assets.”

The analysts highlight a decline in retail engagement, with most new entrants in the crypto space experiencing losses on their holdings, making them hesitant to invest further in the near term.

As a result, Needham is lowering their Q3 forecast and expects cuts to Q2 2024 consensus revenue and EPS expectations.

However, Needham remains optimistic about Coinbase’s longer-term prospects. They retain a Buy rating and a price target of $260, noting multiple positive factors expected to impact the company in the second half of 2024 and early 2025.

These include the increasing odds of a Trump victory, which is seen as favorable for crypto from a regulatory and volume standpoint, as well as upcoming Ethereum ETFs and the positive outlook for bitcoin post-halving.

Despite the current challenges, Needham views Coinbase as a compelling investment opportunity within the growing crypto asset universe. They emphasize Coinbase’s role as a market-leading fiat-crypto on-ramp and its expanding institutional business.

“We expect Coinbase to grow its trading revenue as the market-leading, fiat-crypto on-ramp in the quickly growing crypto ecosystem,” the analysts state, adding that the company’s easy-to-use retail application and growing momentum among institutional firms position it well for future growth.

In summary, while acknowledging short-term hurdles, Needham sees significant potential for Coinbase in the evolving crypto market landscape.





READ SOURCE

This website uses cookies. By continuing to use this site, you accept our use of cookies.