Coinbase stock upgraded by Bank of America amid 'increasing signs of revenue diversification'

·2 min read

Coinbase stock (COIN) is struggling in its first year of public trading, and Bank of America sees upside as the company evolves.

BofA Analyst Jason Kupferberg upgraded Coinbase from neutral to buy while keeping the price target unchanged at $340, which is 45% above where the stock closed on Wednesday.

“The main fundamental reason for the rating change is we have been observing increasing signs of revenue diversification beyond retail crypto trading, a trend we think could accelerate in ’22 and beyond,” the note to clients said on Thursday.

Coinbase stock is roughly flat of a Thursday midday trading and down around 53% from a Nov. 9 high.

The bank is forecasting subscriptions and services revenue to increase 16% of the company's total revenue in 2023, which would be a bump from 12% in the third quarter of 2021.

Analysts also identified other sources of revenue that could yield a positive outlook that are less directly correlated to the price of coins, including Coinbase’s NFTs and decentralized finance projects.

“In our view, scaling of these non-trading revenue streams could also catalyze increased interest in the stock among institutional investors,” the note stated.

PHILADELPHIA, PENNSYLVANIA - SEPTEMBER 04: Attendees line up for the Coinbase ferris wheel during 2021 Made In America at Benjamin Franklin Parkway on September 04, 2021 in Philadelphia, Pennsylvania. (Photo by Kevin Mazur/Getty Images for Roc Nation)
Attendees line up for the Coinbase ferris wheel during 2021 Made In America at Benjamin Franklin Parkway on September 04, 2021 in Philadelphia, Pennsylvania. (Photo by Kevin Mazur/Getty Images for Roc Nation)

And while there remains uncertainty around regulation — which some would call an ongoing potential risk — BofA believes that the trading house’s technology, innovation, and brand are “positive differentiators” as more consumers and institutions flock to the crypto or digital asset ecosystem.

The upgrade comes as cryptocurrencies, led by bitcoin (BTC-USD), hit a bumpy patch following the release of the minutes from the Federal Reserve’s meeting in December.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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