Barclays has recently updated its assessment of Coinbase Global (NASDAQ: COIN), one of the leading cryptocurrency exchange platforms in the market ahead of earnings on 1st August.
In a move that appears to strike a note of caution, the bank has lowered the target price for Coinbase to $196, which is notably below the trading price of $224.46 at the time of publication. Coinbase stock closed down a little over 4% in trading yesterday, as Bitcoin has also pulled back from the $70,000 level for a breath.
Before the bell this morning, Coinbase shares saw a premarket quote of $230, indicating some 2.47% upside from the recent close. Barclays maintains an “Underweight” rating on the stock, however it should be highlighted that the bank still sees potential within the broader cryptocurrency industry.
The price target set by Barclays hinges upon a valuation multiplier of 30 times the estimated adjusted earnings per share (EPS) for the year 2025. The projected EPS stands at $6.52, which forms the basis for Barclays' valuation estimate.
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Looking towards Exchange-Traded Funds (ETFs) in the cryptocurrency sphere, Barclays has flagged significant net outflows for newly approved spot Ethereum ETFs, tallying up to $341 million. Meanwhile, the inflows for the same stand around $1 billion, signaling a complex dynamic in investor movements and confidence.
A deeper dive into the specifics shows Grayscale experiencing the most considerable outflows from its Ethereum trust, losing a staggering $1.5 billion. On the flip side, BlackRock’s ETF stands out with the strongest inflows at $442 million, showcasing a divergent trend in investor preferences and trust allocations.
Coinbase, which assumes the roles of custodian and prime broker for several cryptocurrency ETFs – six for Ethereum and eight for Bitcoin spot ETFs – might stand to gain from these developments through enhanced assets under management (AUM) and boosted activity levels.
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Amidst a burgeoning valuation landscape anticipated for 2024, investors have exhibited unease, opting for a more cautious approach towards injecting further capital into stocks. This sentiment is compounded by the perception that attractive opportunities in the stock market are becoming increasingly scarce.
Earnings expectations for the quarter are for an EPS of $0.87, against revenues of $1.36billion. As you can see from the table below, recent earnings calls for Coinbase have delivered significant beats.
| Reporting | EPS (Expected, $) | EPS Actual | Revenue (Expected, $bn) | Revenue (Actual, $bn) |
|---|---|---|---|---|
| 1st August '24 | 0.87 | – | 1.36 | – |
| Mar '23 | 1.28 | 4.40 | 1.37 | 1.64 |
| Dec '23 | 0.2 | 1.04 | 0.818 | 0.953 |
| Sep '23 | -0.54 | -0.01 | 0.651 | 0.674 |
There is a clear upward trend in both EPS, and revenue delivery over the past year, and if there are further significant upside moves from Coinbase in the looming earnings, analysts may be shuffling to revisit forecasts again before long.
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