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Bernstein Initiates Coverage on Coinbase With Outperform Rating, Sees Strong Growth Potential

Bernstein Initiates Coverage on Coinbase With Outperform Rating, Sees Strong Growth Potential

  • 19.03.2025 21:42
  • cweb.com
  • Keywords: Outperform Rating

Bernstein initiates coverage on Coinbase with an Outperform rating, citing strong growth potential driven by regulatory clarity and market expansion. The firm forecasts a 38% EPS CAGR through 2026, supported by U.S. crypto leadership and institutional adoption.

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Estimated market influence

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Coinbase Global

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Analyst rating: Buy

Bernstein has given Coinbase an Outperform rating, highlighting its growth potential and market dominance.

Context

Analysis of Bernstein's Coverage on Coinbase (COIN)

Market Position

  • Market Share: Coinbase controls 66% of the U.S. cryptocurrency exchange market.
  • Assets Under Management: Over $400 billion in assets.
  • Active Users: Approximately 10 million active users.

Regulatory Environment

  • Regulatory Clarity: Bernstein expects a pro-crypto administration (e.g., Trump) to drive regulatory tailwinds, positioning the U.S. as the "crypto capital of the world."
  • Key Developments:
    • Bitcoin strategic reserve already implemented.
    • Bank adoption of digital assets via SAB 121 completed.
    • Stablecoin bill expected in the first half of 2025.
    • New legislation clarifying digital asset market structure anticipated in the second half of 2025.

Competitive Landscape

  • Concerns: Some investors worry about rising competition and pricing pressure.
  • Bernstein's View: These concerns are outweighed by Total Addressable Market (TAM) expansion due to global crypto markets re-shoring back to the U.S.

Financial Projections

  • Earnings Growth: Bernstein forecasts Coinbase’s earnings per share (EPS) to grow at a 38% compound annual growth rate (CAGR).
  • Estimates vs. Consensus:
    • 2025 estimates are 30% ahead of consensus.
    • 2026 estimates are 61% above consensus.

Risks and Challenges

  • Market Share Risk: Potential slip from 66% to 60% over the next two years.
  • Pricing Pressure: Bernstein anticipates a 20% decline in retail pricing to maintain dominance.

Strategic Considerations

  • Revenue Growth: Trading revenue expected to grow at a 34% CAGR from 2024-2026, which is 47% above current 2026 consensus estimates.
  • Long-Term Effects: Bernstein highlights the long-term growth potential driven by institutional adoption and regulatory clarity.

Conclusion

Bernstein’s Outperform rating with a $310 price target reflects strong confidence in Coinbase’s ability to capitalize on market expansion, regulatory tailwinds, and institutional adoption despite near-term challenges like competition and pricing pressure.